The consequences for under-insured businesses are one of the most series issues that business owners face today. The value of insurance and a company’s chosen policies become truly apparent when a crisis hits and the potential survival of the business rests on the imperative to continue ‘business as usual’, recover and bounce back quickly.  For those without adequate protection in place and the required resources to draw on when needed, the potential damage to a business and owners’ families can be catastrophic.

One of the reasons that fifty per cent of business owners are underinsured and 40% of business owners don’t have life insurance (Buy-Sell; Key Person Insurance Coverage) is because they cannot adequately measure their financial risk. As so many business owners do not know the value of their business, they are missing a vital piece of knowledge for securing the right insurance policies for their business, leading to inadequate and ineffective insurance cover. 

The issue is pertinent for firms of all shapes and sizes; from startups to Fortune 1,000 companies, but mostly for the 99% of private businesses out there.  Now, technology advances in Big Data and the cloud have enabled millions of businesses of all sizes to address their insurance coverage needs following an accurate business valuation.

Cloud-based offerings now provide us with the tools to generate reports in a matter of seconds that guide advisers and their clients to the recommended levels of insurance coverage needed. Technology is ever innovating, and the industry now has the means to evaluate business valuation data with actual underwritten insurance policies, historical insurance trends as well as the industry’s best practise, generating a holistic report.

Businesses and those who advise them can now obtain accurate, real-time projections of their insurance protection needs. With an understanding of their worth, firms and those advising them can now accurately plan cover for the eight key needs, including buy/sell, key person, life, disability and property and casualty. Without incorporating these vital components into an insurance plan it is almost impossible to establish a safe and secure business.

The process also empowers business owners. Too often, the process of establishing adequate protection for a business is too often too overwhelming, with a multitude of options and processes available to protect against the multitude of scenarios businesses may find themselves facing.

Yet with an accurate valuation, owners will be equipped to understand the levels of risk they will be exposed to and can thus select insurance policies based on that – a far more efficient way of using their time to help grow their business’ value and protect their true net worth.