January « 2012 « BusinessInsure Blog

Archive for January, 2012

Unoccupied commercial property insurance quotes – quick and cheap-ish…

Saturday, January 14th, 2012

Unoccupied commercial property insurance quotes are not cheap. There is no getting away from the fact that insurers penalise you in two ways when you are looking to get quotes. Over the years, all of the business insurance companies collate statistics. They also have the ability to share and use statistics from many other bodies, whether for the insurance industry, fire prevention or loss adjusting professions. Everyone you speak to in the insurance world will tell you that empty properties are more susceptible to losses than occupied properties. It is, statistically, the same story year in year out. I have been working in this industry for just over 25 years and every insurer I have ever worked with or for has adopted the same approach.

The first one is not to touch this type of business. The second one is to underwrite unoccupied business property insurance, but with caution. I can guarantee you that hen’s teeth would appear before you would find an insurer that offers a scheme to underwrite all types of unoccupied properties. Every single risk is to be considered on it’s merits. An unoccupied building in one street could be completely different to a very similar looking one in the next street.

When you want to get a quote, as with every type of business, you need to speak to an independent business insurance broker. They will then look around for you. Going back to the heading of this blog, you are never going to get a quote that is cheap. You can certainly get one that is very, very expensive. This is because the insurers are really saying that they do not want the risk.

To get a quote that is somewhere in he middle, nearer to the cheap, you need to speak to us. Unoccupied residential insurance quotes can be purchased for around 0.20% of the buildings sum insured, this can increase to 0.5 or 0.6% for some of the higher risk empty buildings quotes, such as pubs, hotels and other licensed trades.

Posted in business insurance broker, unoccupied building insurance, unoccupied buildings insurance, unoccupied commercial building insurance, unoccupied property insurance | Comments Off

Business insurance quotes – 2012 price increases

Friday, January 13th, 2012

Business insurance companies in the UK are looking to apply increases across many of their product lines. We have been running blog items this week about the reasons for increase. The first one is index linking, the second one is increases to sums insured and the third one, which is a bit more all encompassing, is rating changes.

This is the one where we, as a business insurance broker, have the most difficulty in controlling what the insurance companies do and why they do it. One years target business can suddenly turn into another years non target trade. A lot of insurers will sit around in their strategy meetings and decide that they need to gain more premium income. Rather than look at developing their offerings on their existing range of products, they will decide to branch out into a new range of products. For example, they may decide that one year they are going to move into the fish and chip shop insurance market. Now, there are reasons why many types of business, such as takeaways, pubs, hotels and restaurants are not targeted by every company. The reason is that unless they are priced properly, over time they will cost money.

This is why you may have a broker that gets you a decent, competitive business insurance quote one year and then offers renewal at the existing premium plus 10, 20 or 30% or worse still, even more?

This is where you, as a business owner, have a genuine reason to look around for an alternative insurance quote. We have said before that index linking at 3% is ok but any additional amounts on top of that (with the claims caveat noted below) really are things that you should be able to question.

If you have had claims in the preceding 3 years, you should really expect there to be some sort of increase. Most commercial insurance companies allow a no or low claims ratio discount. When you have a claim this is usually reduced.

If you have had a renewal offer that is just a bit too much, then why not try Businessinsure and see what we can do for you. Email or call us on 08456 024 589.

Posted in business insurance, fish and chip shop insurance | Comments Off

Reasons for business insurance premium increases – part 2

Thursday, January 12th, 2012

We blogged yesterday about business insurance renewal premium increases and the effects of index-linking. This tends to take account of, in 2012, around 2.5 to 3.0% of any renewal increase. This is the only part of a renewal premium increase that you can either take or leave. It is applied by insurers to your sums insured to ensure that, over the years, they do not become inadequate. A small percentage change, year on year, makes all the difference as time progresses.

The second potential reason for an increase in your renewal is changes to your sums insured during the policy year. Let say that you are starting a new business, for example retail, and take out a brand new shop insurance policy. Being sensible, you are going to start out the policy with as little premium as possible, the potential is that you will start with a small amount of stock and this will grow over time, assuming your business starts to grow as well. When your sums insured are likely to be inadequate, you should speak to the business insurance broker that arranged your policy to get the amounts you are covered for increased. This is standard practice across any business. We have seen many businesses going the other way in recent years. As they start to tighten their belts a little, they decide to reduce the amounts of stock they are holding, because usually this means that cash is unnecessarily tied up.

But, as the businesses start to grow and grow again, they are goign to come back and increase their sums insured. All of this means that, during any one 12 month period of insurance, you may have sums insured for contents, buildings and stock that will fluctuate. Amazingly, we stil have some customers that increase their stock during the year and then complain when the renewal premium goes up.

The problem is that whenever a sum insured is increased during the year, it is only ever charged (or should only ever be charged) on a pro-rata basis. Therefore if your policy runs from 1st Jan to 31st Dec, you should only get charged 6 months worth of premium for cover increased on, or around, the 1st July. But, when it comes to the renewal, this will include twelve months worth of premium.

Whilst the index linking of around 2.5/3%, is something you have to accept, for mid term increases you can usually agree some sort of reduction at renewal. As with all business insurance quotes, renewals and changes, you need to deal with a broker who you can access quickly and easily over the phone to discuss any alterations or changes. Then, when the renewal comes around you can speak to the same person to discuss and agree your renewal premium.

Posted in business insurance, business insurance quote, business insurance quotes, shop insurance, shop insurance quote | Comments Off

Business insurance – reason one for premium increases in 2012

Wednesday, January 11th, 2012

Commercial insurance companies offer policies in two ways. Either as a new business policy or as an annual renewal. As with most other financial services, that are annually renewable, you tend to get a better, or more competitive price when you take out a new policy. Insurers will then look to recoup their uneconomic new business pricing at each and every renewal. They will apply increases in three different ways. Today’s blog will look at the first one, index-linking.

This is an acceptable, and sensible, form of increasing premiums. There are various measures out there on the costs of replacing stock, buildings and capital equipment. Whether or not we think prices should have gone up or not over the past three or four years, the fact of the matter is that everything has increased in cost, in real terms. With the increased costs of raw materials and distribution, overall most types of asset that can be covered under a business insurance policy have increased. Usually these are split into three separate categories. Buildings, stock and business contents/equipment. Most insurers use one of the main retail price increase measures and apply different increases, on a percentage basis. For January 2012, one of the main insurers we are using are working on the following increases. Buildings, 2.99%, stock, 3.66% and contents 3.00%. Most of the insurers have very similar levels.

Policies with automatic index-linking are good, in that they take care of your sums insured to save you having to review them yourselves. Overall, the increases are around 3% per annum, even taking into account the recession. If your sum insured is inadequate (too low) then insurers may make a reduction in the settlement costs of any claim. If you insured a building with us 10 years ago for £100,000, if it had 3% per year index linking, we would be offering renewal at a sum insured of around £135,000. But, if you continued to insure at £100,000 then, in the event of a loss you may find yourself under insured by around 30%. This can have a big effect on any type of claim.

If you deal with a business insurance broker, which everyone should, then you need to speak to them about index-linking and what the insurers describe as average. We will look at this in a later blog entry.

So, if your premium has gone up this year, you should accept that approximately 3% of any increase is down to an acceptable level, if it is index-linking. You can, if you wish, ask your insurer to reduce the figure to the same as last year. It is your decision at the end of the day what amount, or sum insured, you have.

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Commercial building insurance and property owners liability

Monday, January 9th, 2012

Public liability insurance falls under, or is part of, the law of tort. Put simply, this focuses on civil wrongs, contrasted to criminal wrongs. If someone is injured, or property is damaged, as a result of your business or property owning activities, you could be held liable.

You may have read in the press about postal workers suing homeowners for slipping or tripping or people suing a building owner when a tile hit their car. These are examples of claims that would fall under property owners liability. Although the claim is directed at the property owner, if they have a commercial property owners insurance policy, then the insurer foots the bill. However, in law the claim needs to go against the individual property owner.

As an owner or occupier you do have a duty of care to anyone that enters or arrives on your property, but there are limitations. In a way this is where the insurers are fighting back. With the advent of no win, no fee legislation, it was very easy for anyone to approach a solicitor and go through the formal claims process at very little cost.

Perversely, some of the business insurance companies set up schemes, offering customers legal expenses to pursue actions, including against their own company. For a few hundred pounds you could buy a policy and make a claim for a few thousand. The solicitors took their ever increasing cut of up to 50%. But, if you tripped on a loose pavement slab or a bit of carpet in a shop you could get yourself around £1,000.

But, the insurers have started to question these claims a bit more. It used to be that it was cheaper to just pay the few thousand than fight the case. Everyone knew this, but as the number of claims spiralled, almost out of control, the insurers started to think that they could, overall save a bit of money.

If you are a property owner and have a buildings policy, you should automatically get cover for property owners liability built in to the policy, if not, have a word with your broker and get this added asap.

Posted in commercial property insurance, commercial property insurance quote, commercial property owners insurance | Comments Off

Two tier pricing for business insurance

Friday, January 6th, 2012

Anyone in business will know, and understand, that most industries offer a two tier type of pricing. Gaining a new customer is more expensive than keeping a customer. This applies particularly to all types of financial services, none more so than the purchasers of annual insurance policies.

Many moons ago I worked for one of the larger, direct only, personal lines insurers. We sold home and motor only in those days. This was before the internet became as readily accessible as it is today and all sales were from a mixture of advertising and solus mailings. All customers purchased an annual policy and, at that time in the late 1990’s we were working on an acquisition cost of £50 per customer. We accepted that whatever was spent on advertising and mailings, we could take a hit of £50 per new customer. Now,with policies for home insurance at the time costing on average £125 per annum, there was no profit margin whatsoever. What we wanted was the customer to stay with us for at least 3 years. If they did not make a claim in that period of time, then the insurers would start to return a profit on that particular customer. We did this in two ways. Firstly, there were no advertising costs to renew the cover each year and secondly, increases were applied at each renewal. Nothing too high though, increases of 3-5% were usually applied, in addition to index-linking. Over two or three years, this meant that a customer was paying, excluding index-linking, about 8% (on the rating applied) to when they were accepted as a new business customer.

What this means, is that as the years go by, the longer you stay with any particular insurer, the more likely you are to be paying more than you would as a new customer. This is where the phrase two tier pricing comes from. Not only do insurers accept that there is a new business acquisition cost, they also have to price competitively to get the business in the door. Now, they would be fools to sell you a new policy for £300 one year and then offer to renew the next at £400. But, what happens if they offer to renew at £317? The chances are that most people will renew it, then the next year is offered at £330.00 etc etc. Over the years, because of your loyalty, you may be penalised.

But, and it really is a huge but, this does not happen in every situation. In particular, if you deal through an independent business insurance broker, they simply cannot get away with adding extra prices on year after year. Customers get wise to this and it goes against the very grain of what we do, which is to service you the customer.

You can, if you wish, chop and change your business insurance arrangements year in, year out. But, this is an awful lot of work for you every twelve months and you may find that eventually you run out of insurers to go to. There are less
commercial insurers than you think out there who can offer decent cover at a decent price. The best thing you can do is to work with a broker and get them to do all of the searching around for you.

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Direct business insurance – what options are available?

Thursday, January 5th, 2012

There has been a trend in recent years for us to go direct to companies, in the hope that we cna get a better deal. However you describe middle-men, or intermediaries, or brokers or advisers, it is not always beneficial to cut them out and try and reduce the cost. Sure, there are certain products and service that you buy where you can save money by going direct, but you are doing some of the work and are taking some of the risk.

It started off with travel agents, many companies were plugging their services and saying that if you booked direct you could save money. The savings were not great and to be honest, when you have to book the flights, coach transfer, hire car and hotel separately to me, this just means there is more opportunity for things to go wrong. The old adage, you get what you pay for, applies. That is not to say that if you book a holiday you should buy from the first travel agent you speak to. You can still search around for a better deal, but it is your choice whether you get an agent to do all of the work or you want to beaver away at home setting up a slightly more complex set of arrangements which you hope and pray will all come together on the day.

The same can be said of the search for direct business insurance. Many customers will look for this as they think that the broker or intermediary is not adding much to the process. Of course this is true in some circumstances where the broker has maybe succumbed to a bit of complacency. But the question is, will you get a better deal going direct to an insurer or simply approaching a different broker? The difficulty is that more and more of the commercial insurance companies that were dealing direct five or six years ago have now stopped this. They realised that the work and cost involved in dealing direct was worse to them than dealing through the intermediary network. Many have now closed the doors to direct business.

We are a very heavily regulated industry, and the insurers need to be as careful about offering advice and the right product. Where they have a limited range of products, the consumer is not really getting a choice. The insurers realised that they coudl nto be all things to all men and as a result, many that dealt direct have now taken the step back to only accepting business through the inermediary, or broker network.

If you are looking for a business insurance quote, on a direct basis, you may find your options limited. A business insurance broker, on the other hand, will search a much wider share of the market on your behalf.

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2012 – business insurance premiums continue to increase

Wednesday, January 4th, 2012

As a business insurance broker, we have to balance the insurers rhetoric, about premium increases, with public perception that you can always get a bargain if you look around long enough. Over the past three or four years, insurers have been hit with the perfect storm elements of reduced customer base, reduced investment income and increased costs of losses. As a result, they are looking to make up for their under-pricing over the years by putting through above inflation increases on all classes of business.

If you watch the television or read the papers or the net, you will always fund someone that advocates shopping around. Bargains are there to be had apparently. But, when you are looking at a physical product, such as a branded pair of trainers or a television, you know what you are getting. Whether you buy the product from retailer A, B or C, you will get the same thing. The differences may be in the terms of the warranty provided, but the actual product is identical.

Contrast this with a business insurance policy, and the waters get a little bit murky. What we mean by this, is that unless you purchase an identical policy from the same insurer then you are always going to get differences. We have said this before, long and hard, that this is where you need a broker. A brokers role is to act for you, the customer, and to look for the best deal available, price, cover and service wise. We have one insurer, that we no longer deal with. Their prices were good, their products were good, but their claims service was terrible. If they were not looking to repudiate a claim, they would spend way, way too long sorting the claim out.

But what is to stop you dealing with this company on a direct basis? Nothign unfortunately. They sell the same products over the net and I fear for any customer that does not have a broker to fight their corner in the event of a loss.

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New Year, new business insurance quote.

Tuesday, January 3rd, 2012

Many years ago, it was traditional for large companies, and the business insurance companies that provided their cover, to have quarterly renewal dates. Whatever date the policy was started, the first years cover was usually extended so that the renewal date was either the 1st of January, 1st April, 1st September or the 1st October. The January and April renewal dates were where the lions share of renewal dates fell. Things have changed andrenewal dates nowadays are usually just 12 months beyond the date the policy was incepted. We can usually change dates for companies where specifically requested. This involves running the first years policy short or long so that they have a common renewal date with other policies.

We do still have a number of policies falling due on the 1st January and these are the ones that are hardest to keep as customers. However much work we can out into the renewal, early on, it is always difficult to be aware of an attacking broker getting involved. The first you normally hear if you lose a piece of business is an email when you are back at work on the 2nd or 4rd January.

It doesn’t happen often, but when it does you do tend to wonder how the customer has got a cheaper quote. We do a thorough job for all renewals andseek alternatives from around the market. We have one such renewal that we were about to lose. In 2011 their premium was around £6,000. The holding, or existing insurers were looking to get an increase in premium, even though there had been no claims in the past three years. As a result, we decided to look elsewhere and got a range of alternatives. The difficulty was, that they had a high limit of indemnity for the public liability insurance, they used blow torches when working at large shopping centres and worked at heights of up to 30 metres. We did get an alternative though at just over £5,000 which, as the terms were the same, we offered.

Now, the client cam back this morning and said they would not be renewing as they had an alternative quote at £4,500. I couldn’t believe this was right and as the client goes back many years, they agreed to send through the terms that they were looking to proceed with.

You can now see where this is going. The alternative quote, on the face of it, was offering like for like cover, with a better premium. But, having delved through the terms, conditions, warranties and excesses it is apparent that the terms are different. The third party property damage was £500 with us and £5,000 with the alternative. They could work at height, but it had to be with scaffolding towers over 5 metres, which was impracticable for the customer. With a compromise excess of £2,500 we kept the business. But, this just goes to show that you do need to look into the written quote that you receive. I tell all my existing clients that if they look long and hard enough they will always, always find a better quote, but, very, very rarely is it on like for like terms.

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Protecting your new employees

Sunday, January 1st, 2012

Recent guidance released from the Health and Safety Executive states that new employees are more likely to suffer an injury in the first six months of their employment than the rest of their working career. Of course this is not to say that the time served employee is never going to have an accident. As a business insurance broker, we have learned over the years that accidents can occur at the strangest possible times. Employees that have worked for companies for many years, never taken days off sick and are very, very careful can simply be in the wrong place at the wrong time.

For new employees, unfamiliar with working practices and trying to learn new things and working methods every day, the likelihood of an accident is vastly increased. The HSE have a role to try and prevent work place accidents, their website has a huge amount of relevant information for you to peruse and help you. It may seem daunting at first, but even basic steps are worth taking. There are of course things that you as an employer will do day in and day out without even thinking about. Your new employee though may need to be shown many many times before they get it right.

In addition to being patient and taking tome to tech, re-teach and teach again, you need to have employers liability insurance in case there is an accident. In 1969 legislation was passed, which has been revised many times since, which states that you must have adequate insurance in force in case an employee has an accident, suffers and illness or catches a disease for which you could be held liable. Employers liability insurance is one of the strictest covers out there. What this means, for the commercial insurance companies, is that you cannot have many exclusions, warranties, restrictions, excesses or conditions.

If you need the cover, you need to speak to an independent business insurance broker to get them to look around on your behalf to get you the best type of cover at the most competitive price.

Posted in commercial insurance, commercial insurance quote, employers liability insurance | No Comments »