Why now is the time to act on insurance renewals

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04/05/2018 3:40 pm

With insurance premiums on the rise in tightening market conditions - it is definitely time to look at your old premiums and consider a review.

The end of financial year is a busy time in every business and one item that is often overlooked or is paid scant attention is the organisation’s insurance coverage both in terms of the coverage of existing and emerging risks as well as the adequacy of sum insured for each risk area.

This is an issue we encounter time and again with new members and we would like to remind businesses to consider whether they are either under or over-insuring existing risks as well as new risks such as data breach. Do not simply sign off on a policy renewal while focussing on other things at this time. With both risks and premiums on the rise, this is even more important in 2018 than in the previous four years.

It is also a good time to re-evaluate whether new types of policies need to be considered to protect your business against new or revised legislation. Like many financial services, increased legislation and scrutiny are driving both policy coverage changes and cost increases of policy renewals as insurers react to risk and insurance market criteria.

Steps you need to take now (and why you should not hold off)

  1. Engage on a review of your risks and existing policies
    While the end of financial year is a busy time for most businesses - neglecting to look at insurance policy renewals early reduces your negotiating position with underwriters. Early engagement with your insurance advisor provides the best opportunity to negotiate the best rates for your business.
  2. Consider strategies to mitigate risk
    Many companies have put the brakes on or limited their investment in compliance and risk mitigation initiatives. With increased scrutiny from insurance carriers and underwriters - a reduced risk approach to insurance translates to increased scrutiny on business practices.
  3. Consider coverages to protect a changing business environment
    With most organisations driving hard at digital transformation (or at least talking about it) combined with the introduction of mandatory data breach notification affecting many businesses from February 2018, reviewing your organisation’s risk profile must now take a high priority. Cyber insurance is one of the most important emerging types of insurance cover for businesses globally. An increased cost of cyber attacks to business and increasing reliance on digital platforms means this area of cover should be on every organisation's agenda for consideration in the short term.

Why are insurance premiums on the rise?

After years of reducing insurance premiums, insurers are desperately trying to drive increases in premiums across their portfolios.

Following a string of natural disasters, market downturns, declining profits and increased scrutiny - insurers are looking to move back to underwriting profitability and deliver a return on investment to their shareholders. This is delivering the following tangible impacts to business customers:

  • More stringent underwriting criteria
  • Greater focus on risk selection (Occupancy, Risk Quality and Geography are key factors)
  • Reduced capacity available and higher premium requirements
  • And less competition among insurance carriers as many exit unprofitable sectors of the market

Another factor that needs to be considered for individual businesses experiencing growth is that increases in payroll can have an impact on both general insurance as well as workers compensation policies. This is often overlooked by businesses in their forward planning.

Need some help?

Through our preferred partner Aon, Supply Clusters members are able to take advantage of a no-obligation insurance ‘health check’ with the team of experts at Aon in all matters insurance. Even if you are using another broker, a second set of eyes to review your current policy coverage before you commit to another 12 months may save a significant amount of time and money as well as adding a further layer of comfort to senior management.

Contact Us today to find out more


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