There is a particular kind of risk exposure that is harder to address than simple ignorance. It is the gap between knowing a risk exists and actually doing something about it.
A survey conducted between December 2024 and January 2025 by QBE Singapore, covering SME decision-makers across the city-state, put numbers on exactly this gap. The findings are worth reading carefully, because they describe not a lack of awareness but a consistent pattern of awareness without action.
74% of SME leaders expressed moderate to high concern about income loss due to business interruption. Only 23% had taken out insurance to cover it.
72% worried about damage to or loss of inventory. Only 29% had insurance for that risk.
72% were concerned about fraud and fraudulent payments. Only 17% held relevant insurance policies.
The gap between concern and cover is not small. In each case, it runs to 40 to 55 percentage points. Most Singapore SME owners understand what could go wrong. Most of them are not insured against it.
This post explores what is behind that gap, why it matters, and what the three most underinsured risk categories actually look like in practice.
Why does the gap exist?
The QBE survey found that in 2025, price became the most critical consideration when choosing an insurance policy, cited by 70% of respondents. This was a shift from the previous year, when the most significant factor was the effort required to find the right policy. The change reflects a wider economic pressure: 66% of Singapore SMEs in the same survey reported higher operating costs in 2025, up from 50% a year earlier.
When cash flow is under pressure, insurance premiums look like a cost to cut. The logic is understandable in the short term. What it misses is that the risks do not shrink when the premiums are not paid. Business interruption losses, inventory damage, and fraud do not become less likely because an SME has decided it cannot afford the cover this year.
There is also a second factor at work. Insurance is purchased in anticipation of something that, by definition, has not happened yet. For a business owner managing daily operational demands, an abstract risk that has not materialised tends to sit below the threshold of urgency. The 74% who are concerned about business interruption have not, in most cases, experienced a serious interruption. Their concern is theoretical. The premium is immediate and concrete. The trade-off feels uneven even when it is not.
Business interruption: the most underinsured risk
Business interruption (BI) insurance covers the loss of revenue a business suffers when it cannot operate normally as a result of an insured event, such as a fire, a flood, or a significant property damage incident. It pays the gross profit the business would have earned, and covers continuing fixed costs like rent and salaries during the period of disruption.
The reason BI is the most underinsured risk on the QBE list is likely because it is the most indirect. An SME owner can see and value their stock. They can see their equipment. The concept of insuring future revenue is less tangible, and the sum insured needs to be set correctly to reflect realistic turnover, which requires more thought than a simple asset valuation.
But BI is also the cover that matters most when something serious happens. A fire that destroys a shopfront can be repaired. The three months of zero revenue while the repairs happen, and while customers have gone elsewhere, is often what determines whether the business survives. The property cover pays for the repairs. The BI cover pays for the months when the doors are closed.
For Singapore SMEs in shopfronts, F&B, retail, and light manufacturing, BI cover is typically available as part of an SME package policy. The key questions are whether the indemnity period is long enough to cover a realistic recovery, and whether the sum insured reflects actual revenue rather than an underestimate designed to reduce the premium. Under-insurance at claim time reduces the payout proportionally. You can read more about our SME package cover on the products page.
Inventory and stock: a practical gap for trading businesses
For a business that holds physical goods, whether as a retailer, an importer, or a manufacturer, stock is often the single largest asset on the premises at any given time. It is also the asset most directly exposed to fire, flood, theft, and accidental damage.
Only 29% of Singapore SMEs concerned about inventory loss hold insurance for it. The likely reason is that stock insurance is often bundled inside a commercial property or SME package policy, and many business owners do not check whether their policy covers stock, what the sub-limit is, or whether the declared value reflects what is actually on the shelves.
A standard SME package may cover stock against fire and theft, but apply a per-category limit that is lower than the actual stock value. A retailer whose total stock is worth S$200,000 but whose policy has a stock sublimit of S$80,000 is significantly underinsured, and will discover this only when a claim is submitted.
The practical steps are straightforward: check that stock is specifically listed in the policy coverage, confirm the sub-limit against the current stock value, and review both at renewal as the business grows.
Fraud and fraudulent payments: the most striking gap
The most striking finding in the QBE survey is the fraud figure. 72% of Singapore SMEs are concerned about fraud and fraudulent payments. Only 17% hold relevant insurance.
This gap is particularly significant because fraud risk in Singapore has been rising consistently, and because the types of fraud that affect SMEs most directly are increasingly well-documented.
Employee dishonesty, which covers theft and misappropriation of funds by a person inside the business, is addressed by commercial crime insurance. Social engineering fraud, which covers losses where an employee is deceived into authorising a payment by a criminal impersonating a CEO, supplier, or bank, is addressed by a social engineering fraud (SEF) extension. The two are different covers for different fraud mechanisms, and both are relevant to an SME that handles payments, maintains stock, or holds funds on behalf of others.
The 83% of fraud-concerned SMEs who do not hold relevant insurance are in a position that is difficult to justify when the cost of these covers is considered relative to the potential loss. A well-structured commercial crime policy with an SEF extension is not an expensive addition to an SME's insurance programme. The losses it addresses, which can run into hundreds of thousands of dollars in Singapore cases that have been publicly prosecuted, are orders of magnitude larger.
We covered commercial crime insurance in detail in Commercial Crime Insurance in Singapore and social engineering fraud in Business Email Compromise in Singapore.
The price sensitivity question
The QBE survey finding on price sensitivity deserves one more comment. When 70% of SMEs say price is their primary consideration in choosing a policy, the implication is that many are selecting the cheapest available option rather than the most appropriate one.
In insurance, the cheapest policy is not always the worst one. But the cheapest policy for a given risk is often the one with the most restrictive conditions, the lowest limits, and the most exclusions. A business interruption policy with a three-month indemnity period when the business would realistically need six months to recover is not cheaper in any meaningful sense. It is a policy that will pay out less when it is needed, which is a different thing from being affordable.
The question worth asking before the next renewal is not which policy is cheapest. It is which policy would actually respond to the loss the business is most concerned about, at a limit that reflects the realistic scale of that loss. The difference in premium between adequate cover and inadequate cover is often smaller than business owners assume.
If you would like to review how your current insurance programme sits against the risks your business actually faces, we would be glad to work through it with you.
This article provides general information only. It is not insurance advice. Policy availability, terms, conditions, and exclusions vary by insurer and product, and cover is subject to the full policy wording. Please contact TZY CO for advice on your specific situation.