Recent research commissioned by a leading premium finance company last month revealed that over a third of UK businesses have cancelled one or more insurance policies, including compulsory insurance such as Employers’ Liability, over the past three years, with the numbers still rising. The research blamed a combination of falling incomes and rising premiums for the spike in cancellations. It is a problem that is worsening as almost half of these cancellations occurred over the past 12 months.
Whatever the reasons, commercial clients continue to play Russian Roulette with their businesses either by being underinsured or not insured at all. Frustratingly this has even been against the back-drop of a soft market. As markets begin to harden and premiums rise this is a risk that can only increase. The broker plays a huge role in educating clients and stemming the tide of underinsurance.
If it is about saving money, then businesses should look at how to save money within the business, not how to leave a business exposed. Also, it is not just about price. There are all sorts of value-added services that insurers and brokers offer as part of their policy or services, such as risk management tools. Clients should be encouraged to make the most of these. Insurance is very competitively priced in all sectors, but we do need to look at ways of helping people get the most from the market.
Self-insurance is of course an option if the business has resource and appetite to adequately cover the risks, but deliberately choosing to self-insure is a very different thing to accidentally self-insuring. SMEs in particular that tend not to have a dedicated insurance buyer or risk manager need the guidance of a broker.
