Archive for the ‘business insurance renewal quote’ Category

Getting a better business insurance renewal quote.

Friday, September 30th, 2011

Ask anyone in the world of business insurance and they will tell you that getting new business is many times more expensive than renewing an existing policy. There are the upfront “acquisition” costs, marketing and time in providing the quotes and then there are the processing and compliance costs in actually getting the policy issued to the client.

To the layman, this may not seem like a huge amount of work or effort, but when you compare this to the work involved in issuing a renewal you’re probably looking at three to four times the cost for new business, compared to renewal. This would make you think that insurers would be keener to keep the renewals than target new business. Whilst the rhetoric from insurers follows this stance, the reality is that they still price new business more keenly than renewals. This is in the hope (which is proven) that once a customer takes out a new business insurance quote, a bit of complacency sets in and as long as there are not huge increases, the customer will renew.

For every hundred new policies they issue, all commercial insurance companies have percentage targets for the amount they want to renew. This means that they have percentage targets for the amount of business they are happy, or prepared, to lose. The ones we have worked with over the years will usually look for a renewal percentage of 75% on the number of policies, if they get 85%+ they are over the moon.

All of this leads to the fact that your existing commercial insurance renewal, is not always going to be the most competitive price available from your insurer. A little experiment is to just phone up your broker when you get your renewal (if it has gone up by more than inflation and index-linking) and ask them to shave a bit of the premium. Without even supplying an alternative renewal quote you can usually get 5% off just for making the phone call.

You do have to be careful though, you may have to prove that you have an alternative cheaper quote on the same terms and conditions, but it is always, and I repeat always, worth looking around at renewal if you have had an excessive increase. The next post will cover additional terms at renewal, which can cost you even more financially.

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Business insurance renewal – how many quotes should you get?

Monday, May 23rd, 2011

Business insurance, is one of the few annually contracted services that you can buy, where there is no real commitment to renew. Think to other services that you may get such as electricity or mobile phones and it appears that it easier to get divorced then get out of one of their contracts.

Having said this, your insurers will, if your business has been profitable and is still on their preferred trade list, offer to renew your cover, in the hope of retaining your business for a further 12 months. The good thing is, that you are under no obligation whatsoever to renew. Most of the commercial insurance companies are, or have been, guilty of operating a dual pricing philosophy. They tempt you in with ultra competitive prices and then, when renewal comes around they put on an above inflation increase. If they can do this for a few years, then they can make themselves a pretty penny.

If you think about it, if they undercut your premium by 10% to get you as a customer and then add in two, three or four percent per year above inflation, then it does not take long for them to be charging too much.

So to go back to the original question, at the start, how many alternative quotes should you get at renewal? The answer is, a little bit tongue in cheek, always more than one.

If your existing insurer is not applying a significant increase, ie in line with inflation-ish, then you should seek at least one alternative just to check that they are relatively competitive. You never know how the market has changed in the past 12 months, it may be that prices have dropped across the board. So what was competitive a year ago may now not be quite so cheap.

If however your existing insurer is applying a big increase and your broker has not thought to offer or seek any alternatives, then you need to get at least two alternatives. Speak to another broker and tell them everything about your policy, your business and the risks it presents. If they ask you for the premium, tell them, but make sure it is true. The chances are, in 2011, with the market still being fairly competitive, that if yours is the type of insurance business that they (the insurers) seek, then you will be able to get a better price.

Our words of warning though are that if you do get alternatives, please make sure that you get these from an independent business insurance broker. This way you can be assured that not only will the broker sell it to you on price, they will also make sure that you get a the right cover. There is no point in proceeding with an alternative quote at 10% less, if the cover and excesses are poor.

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