Insurance costs and Policy coverage is something all households and Business Owners will be looking at either now or when their Insurance Polices are due for renewal.
The first thing we advise is to avoid under insurance in order to save insurance premiums.
Focusing on Business Owners I offer the following advice:
If your business is already having cash flow issues and is unlikely to improve in the short term, talk to your Insurance Broker now. There may be policies where sums insured can be reduced, such as Business Interruption and Liability Policies especially if you have only recently renewed these polices.
With your impending renewal cycle of your Insurance program, be proactive and contact your Insurance Broker prior to 60 Days of your Insurance renewal date.
Discuss with your Broker a strategy on your required policy coverage for the year and premium payment options. Things to consider during these conversations:
Has your business risk changed? How long will my business be affected?
Your Insurance Broker will help you review your insurance policies to reflect any major changes in your business operations, for example:
Public Liability – premiums are based on employee numbers and annual turnover so if these will be significantly reduced, there should be scope to reduce the premium.
Directors and Officers Liability – DO NOT cancel this policy. There will most likely be an increase in Directors and Officers, Employment disputes and Health and Safety claims.
Annual Travel – may not be required for the time being unless you have current travel booked and paid for that you genuinely believe will proceed.
Business Interruption – these premiums are based on future trading projections. Reduced levels of Gross Profit, Revenue or Rents income should be reflected in the premium charge.
DO NOT reduce the Indemnity Period below 12 Months and DO NOT cancel this Policy.
The Gross Profit Sum Insured is adjusted on the actual Gross Profit at next renewal, so if you were over insured you are entitled to a credit to go against next year’s premium.
Material Damage – premiums can be reduced by taking a voluntary excess (most effective for very high excesses e.g. $10,000). Review stock Sum Insured for the balance of the year.
DO NOT reduce sums insured on buildings and plant.
Avoiding Under-insuring – It is important that any insurance review does not result in under-insurance for critical risks particularly in these uncertain times where the threat of burglary, vandalism, theft, looting, fire etc may indeed be elevated. NZ has major natural disaster exposures.
Premium Payment Solutions
There are a few Payment options available:
Option 1. Pay over 80 days (from the effective date) by instalment this will be interest free.
Option 2. Your Broker should be able to offer a Premium funding option, (via a funding company) normally over 10 Months from the effective date of Insurance. Discuss this at your renewal meeting.
Garry Mooney ANZIIF (Fellow) ARM FIBANZ CIP, ICEHOUSE OMP 25
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