Why Liability Insurance Matters More Than Ever for UAE Businesses

SPEAKER_1 (0:01)

Personal finance next at Mira Business FM on the Morning Drive. James Thomas joins me. He's a UE licensed independent financial consultant and broker and advisor, all sorts of things.

James Thomas (0:11)

All of the above.

SPEAKER_1 (0:12)

All of the above, nice to see you.

James Thomas (0:14)

And you, good morning.

SPEAKER_1 (0:15)

So the idea for today came from a piece of branded content from one of the local newspapers. I think it was out, was it yesterday?

I think it was in yesterday's papers, and written by an insurer.

Something we've never gone into in any detail in this segment, I think. So I suppose it's sort of time, really, James. And the basic premise is that liability insurance matters more now than ever, which you would expect an insurance provider to say. But the question really is, why is it more important than ever, and why is it more important than ever now? So that's kind of where we start.

James Thomas (0:54)

Yes. But the reason why I thought it would be something worthwhile discussing, because obviously we've focused an awful lot on individual personal finance, but it's just as important for companies, and not just liability insurance, all aspects of the financial planning for companies. So I just thought this was a good opening discussion into that. Well, it is.

SPEAKER_1 (1:15)

I mean, we often talk about the personal need for like the financial plan, and that's you sat with the pen and paper, making notes, coming up with the early sort of bullet points.

James Thomas (1:23)

I mean, this is no different, really, but it's just, because you're still talking to a person, but they're representing a company rather than themselves.

SPEAKER_1 (1:31)

Well, it's particularly relevant, I think, at a time like now, but it's particularly relevant for people that have maybe a side hustle or a small business or maybe running an SME, because it's as important, arguably more important, to have that financial plan in place to keep examining that financial plan, but particularly now. Does that...

James Thomas (1:54)

Yeah, because... Is that a place to start? It is, but for the reasons you've just listed, more and more people are looking for these side hustles, these extra ways of generating income. But of course, here in the UAE, we have very strict laws on how we go about doing that. We have to generally do it via an LLC, a limited liability company.

You have to have some form of structure to be able to legally transact. And therefore...

SPEAKER_1 (2:22)

Or some form of license.

James Thomas (2:23)

Some form of license, whatever it may be.

And so therefore, if we're then interacting with the public, selling a product, a service, whatever it may be, then we need to make sure that we're suitably protected. Because obviously, if there were to be an issue, that's when the liability insurance kicks in.

SPEAKER_1 (2:42)

Okay, well, we'll look at liability insurance. We'll define it in a minute. But I suppose that in the popular sort of imagination, of boardroom lawsuits and those big catastrophic liability claims, it's almost like that's for the big boys, that's for the guys with the big pockets. So insurance is often seen as a compliance expense rather than an essential business shield. Because effectively, that's what liability insurance is.

James Thomas (3:10)

Exactly what it is. And it shouldn't be viewed as only for the big boys, or the large corporates.

Arguably, as often is the case, it's far more valuable to the smaller companies, to the SMEs, because they haven't got the deeper pockets, should an issue arise, that probably through no fault of their own, but nonetheless, they need that protection, just to make sure that should something happen, there's a fallback position to protect them.

SPEAKER_1 (3:38)

Yeah. Okay. So let's go for a definition of liability insurance.

How do you define it?

James Thomas (3:45)

Well, I'm hesitant, because it's to insure anything. It's from someone coming into your business, it's to someone finding something wrong with your product, your service, whatever it might be that you provide, if there can be any recourse, it can protect you in that instance.

SPEAKER_1 (4:08)

Yeah.

James Thomas (4:09)

And that's not deliberately trying to avoid it, because it's whatever you do, we're in this building now.

Well, you will have liability insurance, should I trip over and hurt myself? If I, you know, but you laugh, but that's what it's...

SPEAKER_1 (4:23)

That, no, what I'm laughing about is, if you did trip over and hurt yourself, I would first of all laugh, and then I would be like, are you okay? But you're right, but there is...