The Insurance Council of New Zealand (ICNZ) is developing an education package for SMEs to help tackle underinsurance in the sector.

ICNZ says only one-quarter of SMEs are adequately covered and more than one-quarter have no insurance.

It is preparing information resources for companies in partnership with enterprise and financial education provider the Young Enterprise Trust.

CEO Tim Grafton says SMEs are “the engine room of the New Zealand economy” and their underinsurance “could pose a significant risk to the economy”.

He points to the role of insurance following the Canterbury earthquakes as proof of its value.

“More than $NZ1 billion ($979 million) was paid out in business interruption insurance after the quakes, providing stimulus to the local economy, keeping jobs open and pay packets full.”

ICNZ is partnering with Young Enterprise for the second year as part of a three-year financial literacy strategy. Last year the partnership targeted secondary schools.

Young Enterprise CEO Terry Shubkin says being financially capable involves having the skills and knowledge to make the right decisions. “Understanding the risks we face daily and being aware of the role insurance plays is a key part of this capability,” Mr Shubkin said.