Are you on insurance autopilot?

Treat your business insurance renewal, like you treat an audit

 

Most businesses review the premium and move on. But renewal is the time to check whether your cover still matches your risk and whether you are getting value for money.

 

Avoid insurance autopilot. Would you get on a plane if AI is the pilot?  Speak to the professionals, you need a proper Risk Advisor to help you make informed insurance decisions. And remember, a risk advisors services come at no cost.

 

Here is what to look for:

 

The Name of the Insured: Check it is correct. It sounds legalistic because it is. The name of the insured on the policy must be the one that owns the assets and would suffer the loss. In insurance this is called an insurable interest. We see this as a common issue in group structures or after acquisitions. For example, if a car is registered in the name of John Smith and the insured name on the policy is ABC Shoes, insurers can deny a claim.

 

Check Policy Details: Your policy is only as good as the correctness of the recorded detail .Renewal is the time to go through insured assets like cars, and All Risks items to insure they are listed correctly in your policy.

 

Business Description: Read it carefully. Insurers base premiums on this and risk advisors use it to analyze your risk. If your operations do not match what your Business Description says on your policy, your claim can be rejected. It is critical to update it when your business changes and always review it at renewal time.

 

Asset Sums Insured: Each asset type needs the right valuation basis. For example, Buildings on the full rebuild cost, equipment on full replacement value, motor is usually set on the reasonable Retail Value. Your policy wording guides this, work with your risk advisor to confirm that each asset sum insured is insured correctly. Get it wrong and you are either overpaying in premium or underinsured.

 

Business Interruption: Your indemnity period must reflect the full time period to resume normal operations following an insured catastrophic loss. Supply chain delays, contractor availability, complex machinery and the like should all be factored into the indemnity period timeline. Does your indemnity period cover realistic asset reinstatement scenarios and does your gross profit definition match your financials? Speak to your risk advisor if you are unsure.

 

Policy Wording: Insurers often tweak their cover definitions and terms and conditions at renewal. For example, new exclusions may be introduced and sub-limits may change. Renewal is the perfect time to review what may have shifted with your risk advisor, as a new exclusion clause or reduced sub-limit may leave the business exposed financially if not flagged.

 

Warranties & Limitations: Policies often warrant alarm maintenance, housekeeping, tracking systems etc. You will need to produce documented compliance if you claim. Renewal is the to check how claim ready you are.

 

Operational Changes: New suppliers, contracts, processes. These directly impact on your risk exposure and invariably introduce risk you have not covered. Raise these with your risk advisor.

 

Dependencies: Utility outages, denial of access, supplier or customer issues. Some of these risks can and should be insured, talk to your risk advisor to ensure you have the widest possible cover for your risk exposure.

 

Optional Extensions: Non automatic extensions widen cover at reasonable premiums. Examples include sum insured escalation for assets, subsidence and landslip cover – these are generally not automatically covered, but are available as paid for cover extensions. Always review the paid for extensions at policy renewal with your risk advisor.

 

Claims and Uninsured Losses: Review your last 12 month loss experience,  both insured and uninsured losses, with your risk advisor. What was covered, what was not covered and crucially, what you learned. Uninsured losses tell you where the risk gaps are. A pattern of claims might mean you need quotes for certain risk exposures or adjustments to your program.

 

Broker and Insurer Performance: Were your claims handled efficiently? Was the advice timely and useful? Was your insurer responsive? Renewal is when you assess whether you are getting the service you are paying for.

 

Policy Structure: Look beyond the premium. Review deductibles and other similar terms. Sometimes a higher excess which you could absorb improves your risk profile and lowers your premium spend. Other times, a high percentage excess for catastrophe cover should be negotiated downwards with the insurers. A professional risk advisors role is pivotal here.

 

Third Party Liability: Are your liability sums insured appropriate for customers, visitors or other third party claims? Keep in mind that your liability exposure to third parties is based on insured legal liability, in other words it is impossible to accurately set a liability sum insured, when compared to setting the value for an asset you own. The rule of thumb is take the highest possible liability sum insured you can afford and always check liability exclusions against your actual business activities.

 

Uninsured Risks: Identify what is not covered, based on what the insurance market is offering. A professional risk advisor will always give you a clear picture of uninsured gaps and recommend quotes on key uninsured risks.

 

Emerging Risk Exposures: New technology, climate impacts, AI, cyber risks, fake news etc. Policy language, insurance markets and available cover take time to catch up with changing risk – ensure you have experienced risk advisor in your corner, who can advise you how best to treat these risks.

 

Renewal is when you align cover with current reality. It is business critical you do this properly with a qualified risk advisor.