On a survey corpus of 5.000 SMEs analysed, the Insurance Observatory of NSA Soluzioni Assicurave SpA, the broker of the NSA Group, shows that only 1,5% of companies are insured for indirect damages despite 30% being already been hit by an accident. The snapshot of the survey reveals a clear picture of the poor perception that Italian companies have of the risks related to damages deriving from business interruption and of how fundamental the relative insurance coverage is for the protection of their business.
The companies analyzed belong to different sectors of activity: 1989 industries, 1680 in the commercial sector, 1192 in the services sector and 281 operating in the building sector. Of these, 4373 have a turnover between 1-5 million, 461 up to 10 million and the remaining 308 with a turnover greater than 10 million. This cross-section, so composite, has allowed NSA SA to detect that in Italy still too many SMEs do not resort to specific insurance protection in the event of traditional accidents (fires and explosions) and catastrophes (earthquakes and floods) which, in addition to causing direct , also produce so-called indirect damages for companies.
The indirect damage – almost always far greater than the direct one since it directly affects the income statement – causes the company even partial interruption of the activity, with serious consequences: impossibility to respect the terms of delivery of the products or services , lower revenues and consequently lower profits, always in the presence of fixed costs such as mortgages, leasing, rent and personnel.
The NSA Group, in the light of its over 15 years of experience in mediation relations with Italian SMEs, has developed in this regard - in collaboration with the Catholic University of the Sacred Heart of Milan - a rating model which relates the insurance aspects with financial ones. “By studying the relationship that claims have on the economic system of a SME, we can state that today this type of damage coverage in Italy is not very widespread, unlike what happens at a European level. Sensitivity to this type of cross-border insurance has already been consolidated with specific “Business Interruption” coverage, underlines Federico Papa, President of NSA Soluzioni Assicurave SpA. “Indirect damage should by no means be underestimated. In small but above all medium-sized enterprises it has a very significant effect as it imposes a production stoppage on the company necessary to restore the conditions for restarting the activity. In some cases it can even lead to the closure of the company” concludes Papa.
Confirming this negative trend also Alberto Floreani, professor of risk management at the Catholic University of Milan, head of the team that works with NSA on the insurance rating system states that "companies' attention in their coverage decisions should be focused on those risks potentially able to put them in "crisis". Business interruption is certainly one of these risks. The scarce diffusion of the indirect damage policy is determined in part by reasons related to the offer but also by a lack of awareness of the companies on their real coverage priorities”.
According to an OECD estimate, the Italian state has paid damages of 35 billion euros in the last ten years. The latest assessment of those caused by the earthquake in central Italy on August 24th is 23,53 billion. Compared to other states, where there is a public-private synergy with damages covered by insurance, Italy is still an anomaly. There is a lack of a culture of protection, a shared drive towards prevention and an assumption of risk coverage by private individuals, with a transfer to the insurance world. The picture of NSA SA is therefore in line with the national data. More and more companies underestimate the benefits of an insurance policy to fully protect their economic assets and therefore the well-being and longevity of the company. Insurance policies are not to be understood as a marginal aspect but should become a strategic item to be taken into account already in the business plan phase and not only subsequently in the event of claims.
