10 reasons why you should review your General Insurance
- You could be underinsured
Industry research has revealed that the vast majority of Australian businesses are underinsured, particularly in the areas of Property, Business Interruption and Cyber Insurance. The best way to ensure that your business insurance is adequate is to have your business properly assessed by a qualified Insurance Valuer. A professional valuation takes the responsibility and risk away from Company Directors and ensures there will be no gap to cover in the event of a claim. Part of the valuation process should be to compile an asset register and maintain it going forward. This will allow you to respond to a loss quickly and with minimal impact to your business.
- Reviewing your General Insurance could result in big savings
Greater competition in the insurance market means that insurance premiums are currently on the decline. An analysis of over 200,000 business insurance policies placed by the AUB network has shown that the price of an average Business Pack policy fell by 2%, with certain types of policies down 7%, in the last quarter of the 2014 financial year. This provides an opportunity for business owners to take advantage of the competitive market to upgrade their insurance without incurring the additional expense. It’s also a good time to get a comparative quote on your insurance to ensure your Insurance Broker is passing on any potential savings.
- Your business could be eligible for a Workers Compensation Premium refund
In 2011, the Victorian WorkCover Authority moved to a national industry classification system based on the Australian New Zealand Standard Industry Classification (ANZSIC). During this process, a number of businesses have been classified incorrectly and are paying more premium than they should. Reviewing your industry classification on a regular basis is essential as your business activities could also have changed since taking out a policy. If you have been classified incorrectly you could be entitled to a refund for up to four years of overpayments. You may not know that you can have an independent consultant working for you to conduct a review of your Workers Compensation program (including your premium and claims) and they can develop strategies to reduce the impact of Workers Compensation to your business, and improve the safety of your workplace.
- A safer workplace means lower insurance premiums
Less incidents = less claims = lower premiums. It’s a simple equation that often gets lost amongst the complexities of running a business. By implementing some simple, well executed risk mitigation strategies you can go a long way towards improving your workplace safety culture and reducing the impact of insurance claims. Some strategies might include:
- Cyber attack is on the rise
Any organisation that stores sensitive or personal data is responsible for ensuring this information is adequately protected. A report published by the Centre for Internet Safety states that 65% of SME’s, in general, do not adequately protect their organisations’ sensitive or confidential business information by encryption or DPL technologies.In addition to this, there is a common misconception that only online businesses or larger companies are targets for cyber criminals. In fact, more than 20% of Australian businesses experienced cyber crime in 2012 (CERT Australia), and 40% of all attacks were directed at SME’s (Symantec).
Most general business insurance policies do not cover your business in the event of a cyber attack. What if your businesses IT systems were hacked? What protection do you have in place and how would you recover from this? If your business is not keeping pace then you could be leaving yourself exposed and liable for any data breaches that may occur.
- Business mismanagement could result in hefty lawsuits
While lawsuits against Company Directors are a relatively common occurrence, few businesses have insurance to protect against this type of risk. It is not uncommon for businesses to have a Professional Indemnity (PI) policy in place and believe that their employees and their business will be fully protected. However, what many people don't realise is that a PI policy will only protect your business against claims made by third parties including negligent acts, errors or omissions you have whilst providing professional advice. It does not protect Directors, Officers and Employees for mismanagement which has caused loss to others. This is where you need to have a Management Liability policy in place. A Management Liability policy will cover the legal liability of all employees and the business entity for action taken against them as a result of wrongful acts committed whilst they perform their duties. It covers the Business, its Directors, Officers and Employees against a range of employment related claims such as wrongful dismissal, misrepresentation, wrongful failure to employ or promote, and theft by employee. To protect your business against liability incurred through mismanagement you need to take out Management Liability Insurance. This will protect your business against claims for a breach or improper conduct against those responsible for managing it.
- One of the most important insurance policies is often overlooked.
Business Interruption (BI) policies have one of the worst, if not the very highest, incidence of under insurance of all the classes of general insurance. This is concerning given that every year 1 in 500 businesses will experience a severe disaster, and 43% of businesses that experience disasters never re-open and 29% close within 2 years (LMI Group, McGladrey and Pullen). Failing to adjust the value of your BI insurance policy in line with the evolution of your business can have disastrous consequences in the event of a loss. Ensure your Insurance Broker is re-evaluating your financial position annually so that you are properly covered.
- Making a claim should be simple and straightforward.
How are your claims currently being managed? Are you happy? Business Insurance is a complex area and the claims process can be a long drawn-out jargon minefield, but it doesn’t have to be. A good Claims Manager should have an excellent understanding of your business and the insurance products you have purchased. Armed with this knowledge they will be able to leverage off their strong relationships with Underwriters to deliver you (the client) the best possible outcome in an efficient manner. If you are not currently receiving this level of service from your Insurance Broker, it might be time to find a new one.
- Your business is responsible for its environmental impact
Business owners, operators and property owners can all be held responsible for pollution or other environmental damage emanating from the premises they own or operate. Government Agencies are able to impose significant fines and penalties, including jail or prison terms, to any business which causes pollution or other environmental damage as a result of the activities of their business and/or property. The exposure relates to all businesses and not just those which store, handle or deal in chemicals or hazardous substances.
Whilst storage of chemicals and/or hazardous substances can lead to damage of land and create environmental damage loss, there is also an exposure for any business which suffers a fire as this can lead to significant environmental damage to both the property itself and can also cause substantial damage away from the situation as a result of run off water applied by the fire brigade.
Fortunately some insurance companies offer Environmental Insurance policies which are designed to respond to pollution and environmental damage arising from the insured’s properties and associated business activities. Importantly these policies include cover for sudden and gradual pollution, including clean-up costs which are not covered by Public Liability policies or other forms of insurance.
- Does your Insurance Program come with expert guidance and advice?
Policy wordings and schedules are legal contracts. These should be carefully reviewed when you purchase insurance as they will be the focus of what insurers refer back to when a claim occurs. Like all industries some products and services are better than others.
Ensure your Insurance Broker has policy wordings that have been carefully reviewed and negotiated with underwriters. However, it’s important to remember, that even with market leading policy wordings, the quality of the advice you receive from your Insurance Broker is still critical when signing up to your business insurance program.
In conclusion, Insurance is a method of protection as part of a Total Risk Management Solution. We recommend you discuss with your Insurance Broker the tangible Risk Management you can undertake to better protect your business from adverse circumstances and litigation. The advice you receive will place you in good stead to ensure your business is fully protected. If you don’t feel confident with the advice you’re currently receiving, then maybe it’s time to consider a comparison with another advisor.