Corporate insurance boot camp essential

In the current depressed economic conditions, companies are prone to undergo internal cost cutting exercises. It becomes necessary to cut back on insurance of corporate assets, or to not update cover due to the pressures of minimising costs.

”Limited budgets can often change our clients’ attitudes towards proper risk management, and saving on insurance premiums can have major ramifications and lead to even worse financial situations in the event of a loss,” says Samantha Boyd, Head of Corporate & Niche Insurance at Mutual & Federal.

Retain proper cover

According to Boyd, it is important for clients to retain proper cover, especially during difficult times. It is also necessary to ensure that values are up to date to avoid average applications, where clients could end up bearing a portion of the risk themselves due to underinsurance.

Cover should be updated as and when circumstances change, such as in the event of capital additions or changes in the business. At the very least, it should be done on an annual basis.
“Brokers play an integral role in ensuring that customers remain suitably covered due to them being closer to customers’ business risks and changing circumstances,” says Boyd. Exchange rates also influence values and need to be carefully monitored.

Proper risk management

Proper risk assessment, coupled with active risk management, has also become increasingly important in today’s environment. Proper risk management can reduce premiums and allow savings for corporate clients.

Whether insured or not, a client does not want to expose their business to potential downtime due to an incident which could have been avoided. This is costly and could result in loss of business and reputational damage.

Emergency vehicle concerns

Boyd points out that another challenge is slow turnaround times by emergency vehicles. “Fire department responses are not quite what they should be, so corporate clients can easily find themselves with total destroyed facilities, necessitating them to rebuild their businesses up from scratch. A team of expert risk surveyors and engineers can provide risk advice and guidance. There are various stakeholders which make up a business, so in-depth consideration is needed to ensure all their interests are protected through a solid preventative approach,” she says.

The value of brokers

After consideration of risk assessments, together with brokers, insurers can conduct a detailed analysis of client’s businesses, need dependencies and financial appetites. They are then able to structure an insurance solution that is appropriate in terms of cover provided, levels of self-insurance and premium.

“Overall, we are seeing improved understanding and positive attitudes towards risk management amongst brokers and corporates insurers,” Boyd concludes.