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Choosing the right insurance package for your business

Analysis

The Budapest Business Journal talks with Allianz Hungária senior portfolio manager György Tollmayer about the benefits of a well-chosen SME insurance package. 

In the Hungarian SME sector, businesses are often underinsured, as they are aiming at cutting costs without considering the potential negative consequences of unexpected events. These events range from extreme weather to unexpected machinery failure.

“It does not matter how careful you are in managing your company, you must not forget that there are external factors that can cause significant damage to your business,” notes Tollmayer. “Sometimes these are natural disasters, such as earthquakes and powerful storms, but a faulty wire in a poorly maintained building is often enough to bring about a disaster. Apart from the financial burden caused by production downtime, replacing a faulty machine is costly, and finding a proper replacement can take a lot of precious time.”

These are not the only cases when an extensive insurance package can help a company save money. In the case of burglary, for example, criminals may not only remove valuable items from the premises but also damage the building while breaking in. Another example may be a burst pipe incident which does not only cause damage to the company’s property, but floods the neighbors as well. Instead of having to foot the bill, an extensive insurance can take care of this problem as well.

“If one of the examples mentioned above happens, it can stop production entirely until the situation is resolved and the damages are repaired. This can become a huge issue if one is working with tight deadlines. While we cannot solve the situation immediately, the insurance can cover a significant chunk of the lost profits,” Tollmayer explains.

In the age of digitalization, one often forgets the abundance of online risks, solely concentrating on potential physical events. However, a cyberattack can cripple a business’ complete IT infrastructure, and it also has the potential to seriously harm a company’s reputation, especially if hackers get their hands on sensitive information. According to a 2020 survey by Allianz, cyber incidents were named the second most serious threat to business by risk management experts in Hungary, only behind changes in legislation and regulation.

“On the market, there are several insurance packages which allow clients to pick extra insurance elements, such as cyber coverage, which provides protection against IT risks,” Tollmayer adds.

Customizable packages

In order to tackle these problems, Allianz Hungária allows clients to put together an insurance package that suits their company perfectly. While a basic option protects against natural disasters and fire damage, clients can also to extend coverage to risks such as burglary incidents, vandalism, and electric equipment failure. The elements of the even more extensive package include downtime insurance, domestic shipping insurance, and product liability insurance.

The company also offers coverage for specific risks related to a given profession. One can find options ranging from liability insurance for veterinarians to liability insurance for event planners.

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