How to approach renewals in a hard market
SME owners and managers have a lot on their minds right now. At the top of the list is how they can best steer their businesses through the pandemic crisis, which has put Australia's economy into a recession for the first time since 1991.
For businesses looking to preserve their ongoing viability, effectively managing costs has become increasingly important. For many organisations, this means cutting back on variable expenses and, respectively, making more conscious decisions about what costs are of real value to them.
When reconsidering costs, the importance of your company's business insurance may come into question and, in such cases, keeping your policy intact is essential. With this in mind, the news of rising or "hardening" insurance prices couldn't have come at a worse time.
During the June quarter, it was reported that in the Pacific region, where Australia is the largest market, insurance renewal pricing increased by a record 31%. Financial and professional liability rates also rose significantly; by 48%, property rates jumped 28% and casualty recorded a 9% increase.
In Australia and across the globe, these prices won't be coming down any time soon. Rather, due to continued harsh economic conditions, insurers will keep raising prices in an effort to mitigate the risks they are underwriting.
For SME owners, the above may sound disheartening. However, even in a hardening market, there are steps they can take to achieve the best rates for their insurance policies. While prices are increasing, by completing sufficient planning, they can open themselves up to negotiation and, ultimately, secure a more desirable price.
First and foremost, before your existing policy expires, review your current and ongoing insurance needs. Typically, organisations will allow about three months to research their business' needs, giving them enough time to complete a thorough, sufficient review.
In addition, documenting your risk control procedures is imperative. In a tough renewal market, insurers are now paying closer attention to whether an organisation has taken suitable measures to protect their premises and business assets. While such actions may seem insignificant, in recent times, they have become all the more important, and their ability to influence negotiations regarding insurance coverage should not be underestimated.
If your business is looking to manage changes and minimise risks in the months to come, we can help you do just that - in an economical way.
How Coverforce can help
While the current environment is tough, you don't need to go it alone. As your broker, we're dedicated to doing what's best for your business. Your continuing security and success is our priority, too.
Contact your local Coverforce office today and see how our professional risks team can help you.
The information provided in this article is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. If you require advice that is tailored to your specific business or individual circumstances, please contact Coverforce directly.
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