Micro, Small, and Medium Enterprises (MSMEs) account for more than 95 percent of Malaysian businesses, driving job creation, innovation, and local development, while forming a cornerstone of a resilient and sustainable national economy.
Yet, despite their pivotal role for the nation, these businesses often face seasonal challenges that can threaten operations and livelihoods. Recently, as Malaysia enters the peak of the monsoon season, widespread flooding across eight states has caused major disruptions, with many business premises among those affected.
Such incidents only hint at the broader impact: lost income, halted operations, and long recovery periods that can undo years of progress. For MSMEs, the impact of unexpected events is ever-present, yet uncertainty about insurance and outdated assumptions often leave businesses unprotected when disaster strikes.
Common misunderstandings about insurance
For many business owners, handling an insurance claim can be a reassuring process when guided properly.
According to Teh Yau Kun, Chief Claims Officer at Berjaya Sompo Insurance Berhad, much of the stress business owners feel while making a claim comes from a simple source, which is not fully understanding how insurance works.
“One of the most common misconceptions is that insurance companies are always looking for ways not to pay. Some believe insurers deliberately delay claims or apply arbitrary percentages. These beliefs can push business owners to inflate claims, which only makes the process longer and more complicated,” Teh explained.
Often, denials arise from unclear terms or confusion around exclusions—not deliberate fault. Teh emphasises that with the right clarity, communication, and preparation, businesses can experience a far smoother claims journey.
Three ways MSMEs can protect themselves
The belief that insurers are deliberately difficult is widespread, but Teh shared that it mostly stems from second-hand stories. “Most of these stories come from friends or relatives whose claims were denied without full context. Many policyholders simply aren’t familiar with their coverage details or the actual reasons behind the decision,” he added.
To reduce operational risks and strengthen financial resilience, business owners can take three practical steps:
Conduct thorough policy reviews: Regularly check coverage, conditions, exclusions, and warranties. Seek guidance from agents or brokers to reduce surprises during a claim.
Maintain meticulous documentation: Keep accurate records of invoices, photos, and videos of insured property. This expedites claim assessments and settlements.
Uphold full transparency: Disclose all relevant information at the start of a claim. Forthright communication builds trust and makes the process more efficient.
Teh also stresses that policies should reflect the current replacement value of assets, not just the original purchase price. “Trust comes from transparency. Presenting information clearly from the start ensures the process runs smoothly,” he said.
Why valuation matters
Many MSMEs understand the importance of insurance, but underinsurance — when the sum insured falls short of actual asset value — is often underestimated.
“Underinsurance typically happens when business owners forget to review coverage or declare a lower sum insured to save on premiums,” Teh explained.
When a loss occurs, insurers apply the principle of average, meaning the payout is proportionate to the declared value:
Sum insured ÷ actual value × loss = compensated amount
Teh shared a real example: a factory insured for RM6 million but valued at RM10 million would only receive 60% of a claim. In one case, a multi-tenant factory was destroyed by fire, leaving the owner to cover RM4 million out of pocket.
To prevent such shortfalls, Teh stresses business owners should view premiums as protection rather than a cost and review coverage regularly. “Reviews should happen whenever risks change, not just at annual renewals, to ensure the business remains adequately insured,” he added.
Preventing common claim issues
Most claim issues aren’t about policy exclusions. They usually result from missing records, delayed notifications, or poor communication. Serious errors, like falsified documents, are rare.
Teh recommends:
Keep organised records year-round
Notify the insurer immediately after a loss
Engage openly with loss adjusters and provide truthful details
Communicate early if some documents are unavailable
Transparent service, every claim
Berjaya Sompo has made transparency a cornerstone of its claims philosophy. “We’ve published our Claims Service Charter on our website, from acknowledgement to final payment. It’s our public commitment to deliver efficient and transparent service,” Teh said.
The company monitors compliance monthly, achieving a 92% rate across four pillars: making insurance accessible, understanding customers, providing timely service, and ensuring fair claims settlement.
To enhance transparency, the full claims process is outlined online, including turnaround times. Policyholders can track their claims in real time via the website, MySompo mobile app, or agent portals. “Whether it’s a claim or a policy renewal, we want customers to know exactly what’s happening and when,” Teh explained.
The value of specialised agents
When disaster strikes, the first hours are critical. Berjaya Sompo’s specialised agents act as a bridge between clients and insurers, ensuring documentation and communication are handled correctly.
“A knowledgeable agent interprets the policy, helps prepare documents, and ensures clear communication. This guidance means business owners aren’t facing the claims process alone. So call your agent immediately,” Teh emphasised.
As risks loom over day-to-day operations, Teh highlights the importance of a proactive approach. Beyond insurance, simple safety measures such as designated smoking areas and maintained fire extinguishers can significantly reduce the impact of disasters.
By combining careful risk management with transparent claims support and expert guidance, businesses can protect themselves and recover more efficiently when the unexpected happens.
For more information on how Berjaya Sompo supports MSMEs, visit their official website or follow their Facebook page for updates, resources, and guidance on insurance and claims.
