Insurance premiums are fees (the Premium) paid to insurance companies to cover agreed risks that can cause financial loss if they occur -for example, insuring your home and contents to cover the replacement costs in the event of a fire.
So why are premiums rising, and what can you do to manage this cost to your business?
Over the last couple of years, most business owners have noticed that their insurance premiums have risen, often by 10% to 15%, but sometimes up to 30% and some insurers no longer willing to offer some insurance products at any cost. This results from two key factors: inflation and increasing labour costs, causing repair costs to grow, as well as the increase in the number and frequency of extreme weather events and claims.
Insurance companies also buy insurance to limit overall claims costs (reinsurance) and are now paying more for their reinsurance due to the increasing cost of weather-related catastrophe claims.
Here are five questions to ask your insurance adviser that will help to manage your insurance premiums.
- When was the last time that you undertook a review of your key risks and insurance? Your insurance adviser needs to understand your existing business, its key risks and assets, and any changes planned for the future. With up-to-date knowledge, your insurance adviser can give you a comprehensive report, so you can make informed choices of the cover, premiums and excess options that meet your needs.
- What are the key drivers for my insurance premiums? Understanding the main factors that drive the premiums for your insurance policies will help you understand what you can do or change in the business to reduce your insurance costs. For example, if you store stock in a building with asbestos and EPS, you will pay much higher premiums than if the stock was held in a warehouse built of brick and steel.
- Are there alternatives to the current insurance cover? Your insurance adviser is a professional that will work with you to manage the risks of your business. Insurance is only one component of risk management. They will help you to explore options for reducing or managing risks that can result in a reduction in your premiums.
- Can I adjust my coverage to reduce the premium? You may be able to lower your premium by increasing your deductible, self-insuring some risks or working to reduce claims frequency.
- Is it possible to negotiate a lower premium with the insurance company? Your insurance adviser can negotiate lower premiums with changes to excesses or operations. On renewal, your insurance adviser can also obtain alternative quotations for your consideration.
By asking these questions, you can better understand your risks and tailor an insurance program that meets your needs and budget.
Contact us today for professional advice and assistance.
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Call: 02 9133 9900
Email: info@lainsurance.com.au