7 steps to securing optimal SME business insurance cover
Published 12 November 2020
Obtaining the insurance cover your small to medium (SME) sized business needs on terms that you can meet can be challenging, especially when the insurance market is in a ‘hard’ cycle, driving higher premiums and reducing availability of cover. Tackling these challenges with a business insurance broker to work through these conditions will help you achieve the best possible outcome.
Here we share our 7 steps to gain the right cover or for renewing your SME business insurance. It’s important to allow time to work with your broker and be open in providing information insurers will want to see.
Build a strong broker relationship ahead of renewal
Your relationship with your insurance broker and their relationship with providers in the insurance market are critically important to getting the protection you need. Your broker should understand your business and know the specific risks you face, which enables them to develop a fit for purpose insurance and risk management program, ensuing you get value for money with the right coverage.
Start renewal preparations early, don’t leave it until the last minute
The more time your broker and you have to work on the renewal of your insurance program, the more likely you are to gain a positive result. That means putting in the time to gather the information they need to see, well before the renewal or insurance date.
Building in a longer lead time helps your broker to present your insurance requirements to, and negotiate with, potential insurers, representing your business in the best possible light.
Choosing the right insurer
While most insurers are well established and offer numerous policies, their appetite for offering businesses insurance cover and how they view each business's risk exposures can vary considerably. You want to work with the right insurers for your business needs. To guide your insurer selection options you and your broker need to decide which will perform best and be the right fit for you, including assessing their underwriting approach, responsiveness and how they handle and respond to claims.
Provide information to support your business risk profile
Providing key information about how you manage the risk exposures in your business operations is key for insurer consideration ‒ in a hard market insurers expect more underwriting information: for example, accurate, up to date building valuations and risk surveys on your business operations. Insurers also seek documentation on a business’s risk control processes, such as supply chain management and accounts payable and receivable.
Work with your broker so that they can present your insurance needs to potential insurers in a constructive way.
Be open to changing your cover and using different policies
The insurance market doesn’t stand still, it actively reflects the impact of claims and large events such as natural disasters, which influences how open insurers might be to taking on your business’s risks. Be open to working with your broker around changes to premium pricing, inclusions or exclusions, deductibles and levels of cover.
Your insurance broker may be able to offer creative solutions for high risk businesses. Be open minded – and don’t fall into the underinsurance trap if you’re initially knocked back.
Consider the need to access both local and offshore insurance options
If you have niche or hard to place risks it’s a plus if your broker has access to a wide pool of connections in both local insurance markets and overseas. London and Singapore based insurers can provide capacity for some types of risks that may be difficult to cover with local Australia based insurers, so you may benefit from access to wider options from global markets and taking a flexible approach that may be new to you. A key positive for using a Gallagher broker is our local and global footprint that supports clients with this capability.
As your broker we work to secure cover on optimal market terms
How much your renewal will be affected by hard market conditions will vary depending on your risk profile, claims record, approach to risk management and your broker’s capability, but most businesses need to be prepared for increases in premiums.
We work with a large variety of businesses, each exposed to unique risks and dealing with individual challenges and circumstances. As one of the leaders in risk management, we remain fully committed to supporting businesses through uncertain times, and finding the right solutions for your business risk protection.
Looking for help with your business insurance?
Working closely an expert insurance broker ahead of a business renewal provides you with critical insurance guidance and negotiation points to gain the optimal solution available for your business, industry and situation.
Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient’s industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers’ control.
Insurance brokerage and related services to be provided by Arthur J. Gallagher & Co (Aus) Limited (ABN 34 005 543 920). Australian Financial Services License (AFSL) No. 238312