SINGAPORE/HONG KONG: A recent survey by QBE featured by the Insurance Business Magazine reveals that Singapore and Hong Kong’s small and medium-sized enterprises (SMEs) are grappling with heightened financial challenges, including rising operational costs and economic uncertainty. The survey carried out between late 2024 and early 2025 gathered insights from 600 SME decision-makers in each market. A staggering 60% of respondents in Hong Kong reported an increase in operational expenses and reduced profitability, compared to just 40% the previous year.
In Singapore, 66% noted higher business costs, a significant rise from 50% in 2024. Additionally, many businesses in both cities are struggling with cash flow and financing issues, with about half of SMEs acknowledging these as major pain points.
The insurance coverage gap – risk awareness vs. protection
Despite the financial pressures SMEs face, there is a clear disconnect between risk awareness and the adoption of insurance coverage. In Hong Kong, 65% of businesses expressed concern about income loss from business interruptions, yet only 24% had insurance policies in place to mitigate such risks. Similarly, while 65% feared losing employees and 64% were worried about equipment failure, only 19% and 25% had corresponding coverage.
The situation is not much better in Singapore, where 74% of SMEs were concerned about potential disruptions, but only 23% had insurance protection. Similarly, 72% of respondents saw inventory damage or loss as a major risk, while only 29% had coverage for it.
Andex Fung, head of SME Segment, Asia at QBE, highlighted the importance of adequate protection. “While cost concerns are understandable, the financial impact of unexpected disruptions can be far greater. Business owners should view insurers as partners who can provide tailored risk management solutions to help navigate these challenges,” Fung remarked.
Workplace safety and employee well-being – Growing priorities
Workplace safety remains a top priority for SMEs in both markets, although some areas have seen slight declines. In Hong Kong, 92% of businesses reported communicating workplace safety policies to employees, an improvement from 90% last year. Awareness of mandatory employee compensation insurance also rose to 83%, up from 76%. However, the adoption of return-to-work policies dropped slightly, and workplace safety incidents increased from 22% to 25%.
In Singapore, 78% of businesses communicated employee coverage and benefits, a slight dip from 81% last year, and awareness of work injury compensation insurance decreased from 70% to 66%.
On a positive note, both Hong Kong and Singapore SMEs are increasingly focused on employee well-being. Mental health awareness remains strong, with 95% of businesses in Hong Kong and 93% in Singapore prioritising mental health support, up from 94% and 89% in 2024, respectively. Companies are introducing flexible work arrangements and remote work options to support their workforce’s mental and physical health.
Talent shortages and cybersecurity risks pose ongoing challenges
Talent retention continues to be a pressing concern. In Hong Kong, 50% of businesses identified talent management as a challenge, a significant increase from 39% in 2024. In Singapore, 49% of SMEs expressed similar concerns, up from 37%. To address this, many businesses have resorted to increasing salaries, offering bonuses, and implementing flexible work schedules. In both cities, flexible work arrangements have become a key strategy to attract and retain employees.
Cybersecurity remains another growing concern, with more businesses reporting cyberattacks or data breaches. In Hong Kong, 33% of SMEs experienced such incidents, up from 30% the previous year, while in Singapore, the figure increased from 25% to 27%. Despite heightened awareness, investment in cybersecurity remains inconsistent. In Hong Kong, the percentage of SMEs using security software slightly declined from 62% to 60%, and the number of businesses conducting cybersecurity training for employees also fell. Similarly, in Singapore, the adoption of cyber insurance dropped slightly, though many SMEs without coverage indicated they were considering purchasing policies.
In response to these challenges, the survey also highlighted shifting trends in how SMEs purchase insurance. In both cities, more businesses are opting for offline interactions, with a growing preference for face-to-face engagements over online platforms. In Hong Kong, 68% of businesses preferred in-person insurance transactions, up from 57% last year, while in Singapore, the figure remained relatively stable at 65%.
A call for comprehensive risk management solutions
As SMEs in Hong Kong and Singapore continue to navigate financial pressures, talent shortages, and an evolving risk landscape, the importance of comprehensive risk management and insurance coverage cannot be overstated. Leaders like Andex Fung and Ronak Shah of QBE emphasise the need for businesses to secure not just basic coverage but protection against a range of potential disruptions.
With SMEs acknowledging the growing risks they face, now is the time for them to partner with insurers who can provide the guidance and solutions necessary to thrive in an uncertain economic environment.