Why you need to act early on your insurance renewals
With insurance premiums in a price rise cycle it is time to look at your current policies before renewal time comes around. There are a number of reasons to consider starting this early rather than leaving it to the last minute.
This is an issue we encounter time and again with new members. Why? Because most people are busy being busy and often insurance is seen as a category we can do little about. But what most companies are failing to do is simply act early. This not only provides greater negotiating power, it allows you to review all aspects of your policies to keep them up to date and avoid both over-insurance as well as under insurance. With both risks and premiums on the rise, this is even more important in 2018 than in the previous four years.
It is also during this time you should re-evaluate whether new types of policies need to be considered. These can protect your business against new or revised legislation or a changing marketplace. 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 before your insurance is due (and why you should not hold off)
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.
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.
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.