The current hard insurance market is proving very difficult for many business owners. Over the past two decades the insurance market has been very soft, meaning insurance rates have remained relatively low with lots of insurers competing for your business insurance premiums.
Over the last 1-2 years the tide has turned significantly. With a series of natural disasters, low interest rates and the effects of COVID-19 affecting the globe, insurers have tilted from a growth-driven underwriting approach to a profit-driven approach.
This has seen many insurers pull out of certain insurance classes and significantly increase rates across the board. From an insurance broking perspective, we are seeing insurers take a far more disciplined approach to underwriting. Insurers are requiring far more information about a business before being prepared to provide a quotation.
If the information is vague or incomplete, an insurer will have no hesitation in declining to quote for your businesses insurance needs. In today’s insurance market, underwriters see hundreds of requests for quotes on a daily basis and you need to make your business stand out as a good risk.
Here’s how you make your business stand out:
*Be prepared well ahead of your renewal by have the following information ready at least 8 weeks out from your renewal date:
Company Information
It is important to ensure the company information you provide to potential insurers is up to date and correct. This includes the following:
- Correct trading entity (not the trading name)
- Correct ABN – ensure the ABN is for the trading entity not the shareholders
- Date business established
- Website with up to date content – one of the first things a potential insurer will do is look at your website to understand your business. If the website is not up to date it can reflect poorly on your business.
Business Activities
This is one of the most important aspects of ensuring your business is properly protected. An insurer will want to see a detailed breakdown of all your business activities and what percentage each activity contributes to your overall revenue.
- Split of your activities by revenue – e.g. manufacture, installation, rigging, plant hire etc
- Split of activities by industry – e.g. mining, energy, construction, general commercial, domestic / residential
- Split of revenue by States
- Split of revenue by Australia and overseas
- Full details of any revenue generated from USA / Canada
Claims Experience
In a difficult insurance market, many insurers will request at least 5 years claims experience on the previous insurer’s letterhead.
- Previous 5 years claims experience for each class of insurance
- Detailed information on any major claim (in excess of $5,000)
Financial Information
- Annual Turnover
o Previous 12 months
o Next 12 months
- Payroll
o Previous 12 months
o Next 12 months
- Insurable Gross Profit
o Calculate your insurable gross profit using an approved Business Interruption Calculator
Property Risks
- Construction of Building
o Year built
o When was the building last rewired?
o Floor Construction
o Wall Construction
o Roof Construction
- Fire Protection
o Fire Extinguishers
o Hose Reels
o Smoke Alarms (Monitored / Not Monitored)
o Sprinklers
- Security Protection
o Deadlocks on Doors
o Window Locks
o Bars / Bollards
o Security Alarm (Monitored / Not Monitored)
Product Information
- What products do you manufacture
o Percentage breakdown by type of products manufactured
- Details of any products which are imported
o Breakdown of products imported
o What countries do you import from
o Details of the overseas manufacturer / supplier
- Details of any products which are exported
Professional Services
- Full details on any professional services provided?
- Do you charge a separate fee for any advice given?
- Annual Revenue derived from professional advice?
- Are you required to and are professionally qualified for any advice given?
Employees & Contractors
- Number of full-time employees
- Number of part-time employees
- Sub-contractors
o Total amount paid to all sub-contractors
o Percentage Breakdown by sub-contractor activities
o Confirmation all sub-contractors evidence they have necessary Public Liability and Professional Indemnity insurance
- Labour Hire
o Total amount paid to all sub-contractors
o Percentage Breakdown by sub-contractor activities
Management Risks
- Up to date Employee Handbook and Procedures including
o Written procedures for handling of complaints of discrimination and harassment
o Provision of training regarding discrimination and harassment
- Ensure you have an update Disaster Recovery Plan in place
- Are all requests to alter customers and suppliers bank details independently verified with a known contact?
- Do you ensure that all transfer of funds in excess of $2,000 are authorized by at least 2 members of staff?
Cyber Risks
- Details of the number of personal records stored on your network
- The number of financial transactions process annually on your network
- Are all mobile devices password protected?
- Ensure all operating systems have updated to embedded firewalls and anti-virus protection software
- External penetration testing of your network at least every 12 months
The above information required may differ depending on your organisation, industry and the specific business activities you undertake.
When it comes to this checklist, it’s important not to skim over the details. The key message is to ensure you are working with a fully licensed, experienced business insurance broker who can work with you to ensure your business is best prepared for the tough renewal season ahead.
In the current insurance market, it is still possible to negotiate favorable terms and keep your insurance premiums from rising – you just need access to a broker who has the expertise and networks in succeeding in such matters.
The key is to prepare early and make your business stand out as a preferred risk to potential insurers.
We specialise in advising businesses on how best to prepare their insurance information to ensure you are properly protected with the right insurance cover at the most competitive premiums available.
If you would like to find out more about how we can help you, please contact us via phone on 1300 400 707 or email broking@crucialinsurance.com.au
This article was written by Tony Venning,
Managing Director at Crucial Insurance and Risk Advisors.
For further information or comment please email info@crucialinsurance.com.au.
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