Leveraging specialist insurance tools to grow business

Insurance is often viewed as a grudge purchase where businesses and individuals transfer the risk of loss or damage to both physical property and intangible assets to an underwriter to protect themselves and their valuables against a possible risk outcome.

Specialist insurer iTOO, is encouraging businesses of all sizes to apply an ingenious way to make use of insurance to assist businesses to increase sales when applied intelligently to existing insurable risks, says Justin Naylor, Managing Director of iTOO Special Risks.

An insurable risk exists when there is variability in outcome.

A prime example of how a business can leverage insurance to grow business is when it attaches a prize to a particular uncertain outcome, such as the breaking of the comrades marathon race record. The lower the probability of this record being broken, the higher the potential prize and its appeal can be, ultimately attracting a greater number of participants to the event, as was the case with the comrades marathon held this month.

iTOO offered the organisers of the 2023 comrades marathon such an instrument, underwriting the prizes for breaking the male and female comrades marathon records respectively, adds Naylor.

He says a similar approach is being applied to another business where guests to a popular private game lodge will win a prize of one form or another should they fail to spot one of the rare big five predators. The prize becomes the incentive to promote and bring more guests to the establishment.

The cost of the promotion or marketing activation comes at a significantly reduced figure to the establishment as their commitment is limited to a small premium fee relative to the full value of the prize on offer, says Naylor.

“It is a very small price to pay for potentially doubling the number of customers to the tourism destination, and if the prize is won-the game lodge’s commitment to settle the prize is the premium fee as the risk is transferred to the insurer,” says Naylor.

“We see this as a very useful and strategic way to turn insurance from a tool that protects a business against a potential loss to a cost-effective marketing tool,” adds Naylor.

“While this type of insurance policy is not new to the market, it is the way that it can be applied to benefit businesses with limited marketing budgets that is market-disruptive,” insists Naylor.