What's Happening?

Facebook Twitter Youtube Linkedin

NEED HELP? QUESTIONS@FIA.ORG.ZA

become A FIA member TODAY
member login

How to help your clients keep business insurance costs in check

ARTICLE BY

  • Jurgen Hellweg

SHARE THIS POST

For clients to adequately protect themselves and the businesses they run for the coming year (and always), it’s essential to accurately assess the risks, and choose insurance cover accordingly. While many types of business insurance policies offer a broad spectrum of insurance protection from equipment, property and buildings, to business assets, liability and business interruption insurance, your client’s business may require more than one – or a combination of policies – to suit their needs.

Like all insurance, the cost of a policy will be determined by the risk versus the likelihood and the potential severity of any incurred loss. The premium will be based on the nature of the business, in which industry it operates, services offered, or which products are handled.

While there are many factors that affect the costs of business insurance, there are just as many precautions and risk improvement measures that can be taken to reduce the cost. Below are nine tips to try:

  1. Imagine insurance isn’t there, and act accordingly

This is the best advice when it comes to insurance. If you actively implement risk management measures to reduce any potential impact if a loss occurs, it can only help. Things like adding an armed response alarm system, implementing better stock control measures, and servicing fire extinguishers regularly are all good steps to take. Acting like you are not insured makes for more risk awareness and encourages risk mitigation processes and measures. Insurers recognise these measures and often discount premiums.

  1. Consider going out of business

Cover these risks adequately and don’t skimp, as your client losing his or her entire business would be worst-case scenario. The cost of insuring against a business burning to the ground is generally (and surprisingly) cheaper that insuring a laptop.

  1. Also consider the true costs of time and replacement value

Expensive equipment can not only be costly to fix or replace, it can also take time for a new part to arrive and this can negatively impact your client’s workflow, and consequently cashflow. Ensure that enough loss of profits cover forms part of a policy. Factor in adequate indemnity and realistic time periods, which will be required to get a business back to full operational level. Also make sure that the real replacement costs of equipment in present day value are correct. You can ask insurers for recommendations as to who could value your clients’ businesses sufficiently, too.

  1. Generally, don’t sweat the small stuff

Keep in mind that items like cellphones, for example, are very costly to insure because they have a high frequency of loss, which essentially pushes up the premium. Depending on the nature of your client’s business, some adjustments may be possible.

  1. Implement thorough internal controls to reduce and manage potential loss

This should include your client making employees accountable and aware of their responsibility to the company. Stringent stock controls, good vehicle maintenance programmes, strong cash management control, sound quality controls and so on. These control measures will all contribute to good risk management. Businesses with sound controls and good risk management attract better ratings and less punitive measure on their policies.

  1. Have higher excesses in place

This will bring premiums down quite a bit. You may find that keeping a reserve fund to cover an excess, should a claim arise, is a better system for your client. Saving money each month instead of paying a premium for lower excesses can work for many businesses. This will of course be determined by the financial position of the business and how your client manages internal controls.

  1. Make maintenance a priority

Insurers will often inspect the risk they are taking. Well-maintained assets that may be risks will not incur any additional improvement costs and are well-respected by insurers. Insurance companies seeing this sort of result, will be more reasonable on pricing.

  1. Listen to your insurer’s advice on improvements

Insurers may also recommend some improvements. By making these improvements, risks will be reduced, and the cost of the policy will decrease.

  1. Focus on your partnership

As their adviser, you are a partner in your client’s journey, so it’s essential to understand your client’s business, its financials, and what kind of a risk taker your client is. These are the factors that drive insurance costs up or down. While it is your client’s responsibility to accurately value his or her business and provide the correct information to you, as their adviser in order to keep cover consistent and cost-effective, it’s essential to remind your clients to keep values up to date.

Taking these steps can really help to manage business insurance costs. In the tough economy, the safety net of short-term insurance has never been more important to get right.

Subscriber Terms and Conditions

  1. APPLICATION OF TERMS
    • These terms and conditions (“Subscriber Terms”) apply to the subscription by any qualifying member of the South African Underwriting Managers Association NPC (“SAUMA”) to the services and benefits offered by FIA Services (Pty) Ltd (“FIA Services”) under the SAUMA affiliation arrangement (“Subscription”).

  2. NATURE OF SUBSCRIPTION
    • A Subscription under this arrangement:
      • does not constitute membership of FIA NPC;
      • does not confer any voting rights or governance participation in FIA NPC; and
      • is governed solely by the contractual relationship between the Subscriber and FIA Services.

  1. ELIGIBILITY
    • To qualify for the Subscription, the applicant must, at the time of application, be a current paid-up member of SAUMA.
    • FIA Services will verify the applicant’s SAUMA membership status with SAUMA prior to activation, and may re-verify such status periodically.
    • If a Subscriber ceases to be a paid-up member of SAUMA, the Subscription will correspondingly be terminated.
    • Applicants are required to authorise FIA Services to confirm their SAUMA membership status with SAUMA as part of the application process.

  1. SERVICES
    • The Subscription entitles the Subscriber to the following benefits:
      • Complimentary access to the FIA CPD Platform;
      • Complimentary access to the FIA Insight Magazine (digital edition);
      • Advertising opportunities on FIA platforms at a discounted rate of 15% (fifteen percent) off the prevailing published rates; and
      • Invitations to attend FIA Technical Webinars annually.
    • FIA Services reserves the right to update, vary or substitute the Services from time to time, provided that the overall value and nature of the benefits remain materially the same.

  1. FEES AND PAYMENT
    • The monthly subscription fee is R260.00 (two hundred and sixty rand) for up to seven registered individuals (Key Individuals and Representatives), and R36.00 (thirty-six rand) per additional registered individual thereafter, excluding VAT.
    • The Subscriber shall provide FIA Services with the required details of each individual to be registered under the Subscription for the purposes of activation and billing.
    • All fees are exclusive of VAT, which shall be charged at the prevailing statutory rate.
    • Subscription fees are reviewed annually in March and may be adjusted with effect from 1 April.
    • Any changes to the Subscription, including but not limited to the number of Representatives and Key Individuals registered under the Subscription, may only be effected once annually during the annual review period in March of each year, with such changes taking effect from 1 April.
    • Subscription fees shall be billed monthly in arrears, unless the Subscriber elects an annual billing cycle at the time of application.
    • The Subscriber shall ensure that all billing information (including contact details, authorised signatories and bank account details) is kept accurate and up to date.
    • Non-payment of subscription fees may result in suspension of access to the Services until such fees are brought up to date.
    • The Subscriber acknowledges and agrees that all subscription fees payable under these Subscriber Terms may be collected by way of debit order, which shall be processed by the holding company, FIA NPC (The Financial Intermediary Association of South Africa), on behalf of FIA Services. Payment to FIA NPC shall be deemed to constitute valid and sufficient discharge of the Subscriber’s payment obligations to FIA Services under these Subscriber Terms.

  1. ONBOARDING
    • Onboarding will be conducted as a Subscription with FIA Services under the SAUMA affiliation arrangement.
    • Onboarding will not confer FIA NPC membership status or any associated rights.
    • Onboarding is conditional on confirmation of the Subscriber’s current SAUMA membership at the time of application

  1. DATA PROTECTION
    • FIA Services will process all personal information in accordance with the Protection of Personal Information Act 4 of 2013 (POPIA) as set out in our POPIA policies.
    • By subscribing, the Subscriber authorises FIA Services to confirm their SAUMA membership status with SAUMA and to process personal information for the purposes of fulfilling the Subscription.

  1. TERMINATION
    • The Subscriber may terminate the Subscription by giving FIA Services one calendar month’s written notice.
    • FIA Services may terminate the Subscription on one calendar month’s written notice, or immediately if the Subscriber breaches these Subscriber Terms and fails to remedy such breach within 14 (fourteen) days of receiving written notice.
    • Termination of the SAUMA–FIA Services affiliation agreement shall not automatically terminate these Subscriber Terms.
    • Termination by the Subscriber shall not relieve the Subscriber of liability for any subscription fees accrued up to the effective date of termination.
    • FIA Services may suspend or terminate the Subscription with immediate effect in the event of non-payment of fees by the Subscriber.

  1. GENERAL
    • These Subscriber Terms are governed by the laws of the Republic of South Africa.
    • Any disputes arising under these Subscriber Terms shall be dealt with in accordance with the dispute resolution provisions contained in the FIA NPC membership terms and conditions, as modified to reflect that the contractual relationship is with FIA Services.
    • Any notices required under these Subscriber Terms may be validly delivered by email to the addresses provided in the Subscriber’s application form, and such notices shall be deemed received on the day of transmission if sent during business hours.
    • The Subscriber may not assign, cede or transfer any of its rights or obligations under these Subscriber Terms without the prior written consent of FIA Services.
    • No variation of these Subscriber Terms shall be of any force or effect unless reduced to writing and signed by both FIA Services and the Subscriber.