High premium threshold discourages SMEs from enrolling in Catastrophe Insurance

The Small and Medium Enterprise Natural Catastrophe Property Insurance (SME NatCat Property Insurance), designed to cover financial damage to local shops caused by severe natural disasters, may not receive widespread support from owners owing to red tape and a high premium threshold.
A TDM report quoted a shop owner operating a stall at Inner Habour, which is one of the places in Macau that is most prone to severe flooding, who expressed a low inclination to enroll in the insurance plan due to the costly annual premium.
The scheme was founded in 2019 to provide financial aid to those who experience financial or property loss due to natural disasters, including the fourth level storm surge warning and tropical cyclone signal No. 8.
Through the insurance program, would-be insurants can sign up for one of the three annual premium plans, valued at MOP25,000, MOP50,000 and MOP75,000 respectively. The insurance amount for these plans will be four times their premium figures, at MOP100,000, MOP200,000 and MOP300,000 respectively.
The premium is considered a hefty amount for local SMEs. Some even claim that policyholders may as well just pay the financial loss incurred from such events themselves rather than take out the policy across several years.
Some owners also stated that the scheme has rigorous preconditions to meet before they can receive the insurance payout.
This year’s insurance program commenced its application period yesterday on June 21.
From 2019 to 2020, a total of 37 applications were approved through this insurance scheme. The claimants cover a wide range of industries, ranging from food to retail to wholesale.
Local SMEs can enroll in the scheme through the city’s four participating insurance companies. The scheme applies the same premium to the businesses, regardless of their locations in Macau.
It also provides discounts on premiums for current policyholders who have not made any claim so far. For instance, they can enjoy 20% off from the original premium if they sign up for the package for the second year.
To encourage more SMEs to enroll in the program, the Macau Monetary Authority (AMCM) and the Economic and Technological Development Bureau (DSEDT) jointly launched a subsidy scheme to offer eligible SMEs a subsidy capped at MOP30,000, or valued at 50% of the premium.