We have just received a commercial insurance enquiry from a bed manufacturer. They explained that their policy is due for renewal and they were struggling to get an alternative quote.
Their existing insurers had the business placed in the Lloyds of London market and they had been quite happy for the past couple of years. But, their 2011 renewals had come in with a 16% increase. Now, insurance premium tax has gone up by one per cent and many insurers are slowly starting to increase their prices. Now, when we say slow, we mean just above inflation, 3-5%.
So, why has our bed manufacturer had such an increase? If you have the radio on at work, as we do, you can’t help but listen to dozens of cheaper insurance adverts all day long. The answer to the question is, that the commercial insurance companies, love their fruit.
What does this mean? They are experts, and we mean experts, at cherry picking. Give them 500 different types of business, shop, manufacturer etc and they will be able to list them from top to bottom. The top being the ones they want, and are prepared to price accordingly, and the bottom being the ones they really do not want, where again, they will price accordingly.
Bed manufacturing means wood and materials that can catchfire. Insurers will then transfer this risk into a price. If they do not want it, then they will charge what they want. The insurers that are prepared to pick this business up will quite happily charge what they want, in the full knowledge that very few others wil want the business.
So what does the customer do? They came through to Businessinsure by searching for manufacturing insurance (because I asked them) and we have just shaved £500 off their quote, leaving them quite happy.