Can you explain, based on the experience of Ares Insurance Services, what is the importance of business protection in this context?
In a world where the value of companies is increasingly connected to personal contacts and the skills of the collaborators and partners with whom they operate, ensuring operational continuity is essential. Fortunately, we never think of the worst and always remain optimistic and positive, but the sudden loss of a key person, such as a partner or a strategic collaborator, can have a devastating impact on the future of the company; thinking about it and planning this eventuality in advance allows us to face the unexpected with greater serenity.
What can be the consequences of a lack of planning?
In the event of unforeseen events, such as the death of a key person, companies risk losing customers and employees, experiencing drops in productivity and earnings, seeing their credits interrupted, and taking into account high costs for recruitment and training to replace the key person. The heirs may be forced to quickly sell company shares, often at unfavorable conditions, compromising the value built up over time. Conversely, the company would be forced to quickly find liquidity to appease the heirs.
We often tend to underestimate the risks associated with the loss of skills and specialized knowledge, as well as strategic relationships built over time, forgetting that sudden events can affect the company's cash flow, debt management and ability to meet financial commitments.
In this sense the your advice it concerns the case in which a partner or a key employee of a company suddenly passes away. Why is it important to predict this situation in a timely manner?
"I'll explain it with a practical example. You and your business partners have built a company by investing all your capital. With great personal commitment the company is successful, but you are aware that your success depends heavily on your partners, your personal contacts and the skills of your carefully selected collaborators. I often ask: "How do you protect the work and sacrifices of a lifetime, protecting yourself?" The answer is almost always the same.
What solutions can be adopted to protect the future of the company?
An effective approach is to plan for financial protection for critical situations. For example, provide capital that can be used to cover extraordinary operating costs, manage possible changes in ownership, or reorganize the team with new key figures.
But going back to the example of the loss of a key person within the company, the answer is Key Person Insurance. An insurance designed and conceived to protect the company from financial losses, in the event that a business partner or a key person were to die. The insurance quickly and without complications pays the agreed sum to the company.
This capital can be used for example for:
- the acquisition of company shares,
- payment to survivors;
- the continuation of financial obligations;
- the search for a solution for the succession
- support the costs of external consultancy
This way you will ensure that your business survives even if it suffers a blow of fate."
As a it works this Key Person Insurance that you propose for to deal with this eventuality and how to exercise your organisers' activities di advice for guarantee corporate continuity?
«The company is the contractor, payer of the premium and beneficiary in the event of a claim. The insurance is concluded on the head of the key person or persons in the company. They can be the company's partners, as well as people who have specific tasks and skills and/or interpersonal relationships. The CEO, the marketing manager, the technical manager, the sales manager come into consideration, without neglecting those realities
medium-small, where even a valid assistant/secretary, the workshop manager in a garage or the chef in a restaurant can be the key people for the company. It is therefore essential for us to interact with the partners and the top management of the company, with a four-handed work, planning with them the maximum exposure
but which they could have financially in the event that one of the key people were to suddenly pass away."
Se ho BEN I got it si is of a sort of third pillar in favor of the company?
«Exactly. With key person death coverage, the insured sum is used by business partners/owners to purchase the deceased person's shares in the company and to cover all costs, as well as provide guarantees to those who believed in the project, by providing loans or investing in the company. In this way, the business performance will be affected as little as possible.
Briefly summarizing the benefits of this important insurance protection, the customer:
- has the financial means to meet the needs of the heirs, by acquiring his shareholdings and avoiding conflicts and disputes with the heirs, who quickly sell the company shares to collect the money;
- the company has no difficulty finding a replacement;
- headhunter costs are covered;
- the remaining partners/owners gain time to calmly plan the future of the company;
- Thanks to the insured capital, a credit interruption due to the death of the person is effectively prevented and "emergency sales" will not be necessary.
Finally, even in this context, defining yourself as “a single, completely independent, trusted interlocutor”, what does it mean?
«It means that we work with all the players in the insurance market, having agreements with all the best insurance companies based in Switzerland, without preferring any. As we say, “we work with all the insurers, without having married any”, always aiming at our only interest: the best solution for the customer.
