Due to the sensitive nature of the sums divulged and the sheer importance of a companies’ insurance cover, the task of managing renewals often falls with the business owner or senior manager even if you have a procurement or facilities team in place. However, for many, carrying out a detailed review of your business’ insurance policies is low on the list of priorities as much of your time is taken up with day-to-day business operations. When your renewal deadline arrives it’s easy to stay with the same provider and to keep to the same policy terms that were always in place.
In fact, a report carried out by a major insurer (RSA) in 2016 showed that just 54% of SMEs had reviewed their insurance in the previous 12 months, while 43% have not done so for more than a year. If you belong to that 43% then it is vital that you review your policy/policies as soon as possible.
Here are our top 4 reasons why:
1. Your business is at risk of being underinsured and could incur financial losses
Failure to review your insurance requirements on a regular basis could mean that your business is underinsured. Underinsurance is where insurance cover is inadequate for the requirements of the business. This can lead to difficulties should you need to claim against your policy as the claim would exceed the maximum value that your business could be compensated for.
2. Your business environment is always evolving
Your business itself and the external environment it operates in changes consistently over time. Your business may increase in value, it might expand to more sites or you might even buy out your competition. Externally, threats and opportunities will arise, changing the focus of the business or potential risk that needs to be insured against. However, experts say that insurance premiums are often not updated the account for these changes. The report by RSA showed that “seven in 10 business owners said new risks have emerged since they first started their company, but a whopping 82% have not altered or increased their insurance coverage as a result of technological change.”
3. Avoidance will not save you money in the long run
Some business owners fail to prioritise the valuation and risk assessment aspects of their insurance planning for fear that any adjustments may lead to higher premiums. Unfortunately, if you don’t have the right insurance in place you could find it difficult to make a claim. Saving money on your insurance premium upfront could be a false economy as once a loss has happened it is too late to make any changes to your insured terms.
4. Definitions and Terms and Conditions can vary from insurer to insurer
There can sometimes be a disparity between what a business thinks it is covered for and what it is actually covered for. Definitions and terms of insurance can differ from insurer to insurer and also within professional functions. For example, the definition of gross profit differs between insurers and accountants. It’s for this reason that it's particularly important to make sure that you have a full understanding of your cover requirements when changing insurers as the parameters that you were previously working with may change under a new insurer.
For all of the above reasons, it’s critical that you have a full understanding of your business insurance requirements and make sure that you are insured accordingly.
Our nominated insurance partner is used to working with our clients across a wide range of industry sectors. Our recommended insurance advisors will take the time to understand your business insurance needs and will make sure that your cover meets your requirements.
To talk to an expert about your insurance needs, please contact BCR Associates on 03330 433 233 and we will put you in touch with our partners.