To insure or not to insure? That is a significant question for most businesses. Do I purchase a policy to cover the risk, or do I assume the risk myself?
A Broker must assess your company’s risks and determine how susceptible you might be to future losses. The ability to explain to you your exposures should make the decision process more manageable.
Certain factors are relevant to all commercial insurance businesses that insurers will consider; location, revenue, experience of the owner, industry, claims/loss history and so on. Other commercial insurance products require underwriters to look at information from a range of objective and subjective sources, which you may or may not be able to influence.
There are some practical steps you can take to make your business more attractive to an insurance carrier. As insurers themselves struggle with the current uncertainties, it will be challenging to save on business insurance costs without adopting risk management strategies in the most significant risk areas.
Here are some things to consider:
Undertake Property Risk Assessment
One of the most apparent threats you might address is the risk to your commercial premises. A business with all its assets stored in one large warehouse will be a riskier entity than one with assets spread across several locations as it’s more likely to suffer a total loss.
Listing all potential hazards will allow for pre-emptive measures to be put in place. Installing a professional alarm system and sprinklers adds another security level to a physical location. Routine maintenance to drains and gutters can prevent water damage, but again, document processes rigorously.
According to the IBC, 2019 was the seventh most costly year on record for damages related to the weather, and these once ‘freak’ events will grow in frequency and severity. We can’t control such circumstances, but businesses can plan for unique events in the future. Undertake scenario planning for future property risk, and you’re likely to be rewarded by insurers for this forward-thinking.
Evaluate Reputational Risk
Reputation takes a long time to build and very little time to destroy. The widespread access to the internet and social media means businesses have nowhere to hide if and when something goes wrong.
Reputation can be negatively affected in many ways :
- Misuse of customer data
- Data breaches
- Product recalls
- Inaccurate information posted online
As a business, you could work on:
- Putting a cyber-security plan in place to outline how you’ll secure your website, keep customer information and payment systems safe and how to prevent scams and fraud.
- Creating a clear social media policy outlining who can access accounts, post them, and officially communicate online will control future issues.
- Listen to customer and employee complaints even if they appear small. Addressing a small product defect as quickly as possible could prevent a total recall, for example.
- Being decisive and developing responses to customer issues online so that you can counteract negative reviews quickly and politely with facts. Never engage in debate with a customer online but look to increase positive reviews and PR, so the good outweighs any bad.
Develop a Risk Management Strategy
You don’t have to pinpoint every threat to work on risk mitigation, but partner with an insurer to identify which risks might be most costly to you and put a strategy in place to reduce them.
Taking a little time to prevent losses to your business activities will make you more attractive to insurers. Besides reducing your premiums, implementing risk management strategies can have surprising benefits by way of a more engaged and effective workforce and improved long-term sustainability.
Take control and talk to us about managing your risks more effectively.