Half of Asian businesses have no liability insurance: QBE

Asia’s corporate market is significantly underprotected against liability risks, according to a recent study by QBE Insurance that revealed roughly half of Asian companies have no business liability insurance at all. The report, Risk in Regret, shows that the vast majority of Asian businesses have some form of insurance, most notably property and casualty, but less than half have invested in any kind of liability coverage. Furthermore, the liability protection gap is not just restricted to some of the less developed markets. Adoption of business insurance stands at 54% in Indonesia and Singapore, 47% in Hong Kong and 45% in Malaysia. Even more worrying is the fact that 63% of the companies surveyed conceded that they had suffered a liability-related incident in the past 12 months. “Our research shows that liability risks are among the most unrecognised and underprotected business issues in the region,” said Marcelo Teixeira, global head of bancassurance and head of strategic development, emerging markets division at QBE Insurance Group. “This is very concerning, because it potentially puts businesses, clients and the public at risk, raising issues around social responsibility. Many businesses are also missing out on compensation opportunities.” QBE surveyed more than 1,200 businesses – both SMEs and large corporations – in Singapore, Hong Kong, Malaysia and Indonesia and asked them specifically about their knowledge and adoption of three liability-related products – public and product liability; professional indemnity (PI); and directors and officers (D&O) liability insurance. The first group has the most awareness and ownership (31% and 19% respectively) but both PI and D&O have ownership levels of 15%, with D&O having an awareness level of just 24% across the four markets. While D&O is still a relatively new product in insurance terms and is generally seen as the last significant new area of insurance prior to the emergence of cyber insurance, the high number of corporate scandals faced by Asian companies, an increase in corporate governance standards and more sanctions against senior managers over liability issues, have seemingly yet to take effect in terms of insurance adoption. In addition to the lack of awareness of liability insurance products, QBE says its research shows that Asian companies are too reactive rather than proactive when it comes to their business risks. For example, 42% of those businesses that invested in accident-related business liability insurance only did so after they experienced an accident. “While it is, perhaps, understandable that many companies tend to react after an incident, we were surprised by how many said they still took no protection action whatsoever,” said Mr Teixeira The most commonly cited reason for not buying any business liability insurance is a lack of budget (32%), while 23% believed that their limited company status provides enough protection against third-party liability. The survey also showed that there is a clear need for more dedicated and professionally qualified risk managers to be employed among Asian businesses if insurance is to be more widely adopted. Roughly one in five (18.5%) of companies said they either had no time to research insurance policies or else found them too complex to understand, while 16% said that the idea of business liability insurance had never crossed their minds. Clearly more education is needed to explain the benefits of insurance, said Mr Teixeira, although he also called on the insurance industry to take some of the blame and to make products more accessible and easier to understand to all companies, but especially to the more cash-strapped SMEs that are less likely to employ a dedicated risk or insurance manager. Yet Mr Teixeira is optimistic that continued challenges in the business world combined with some demographic changes will help to strengthen the case for risk management. “With a rising middle-class across Asia, we are seeing a cultural change as employers and employees understand the importance of managing risk – not only to reduce financial loss but, more importantly, because it is the socially responsible thing to do.”

Half of Asian businesses have no liability insurance: QBE

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