The collapse of insurance giant HIH in March this year - coupled with the terrorist attacks in the United States - have triggered a series of substantial insurance premium increases that are affecting businesses throughout Australia.
Although there is no chance of escaping the increase in premiums because they reflect what is happening globally, employer group Australian Business Limited (ABL) suggests there are some things you can do to protect yourself and your business.
Tips for business
- Engage a broker based on recommendations from your business peers. Do not refer to the Yellow Pages to find a broker.
- Employ the services of a respected broker who deals in your particular business.
- Deal with a broking firm that has specialist capabilities in the areas of professional risks, such as directors and officers' liability, professional indemnity, workers' compensation, trade credit (insuring against bad debts), etc.
- Ensure that the chosen broker does not have a strategic alliance with a particular insurance company. "Some 60% of brokers act as agents on behalf of insurance companies and as such do not search the marketplace on your behalf for the most suitable broker. If a broker is strategically aligned, they must be seen as being more agents of the insurance companies as opposed to agents working wholly and solely on your behalf," Paul Hines, ABL member and director of General Security Australia, advises.
The National Insurance Brokers Association (NIBA), the industry body for brokers, recommends that businesses:
- Carefully review existing policies with your broker so that in the event of a catastrophe there is adequate insurance. Inadequate insurance can also have a compound effect thus increasing insurance premiums and values.
- Have a clear understanding of what insurance cover you require whether it be for assets or business interruptions.
- Know which organisations in your supply chain have gone out of business.
- Review your risk management principles.
- Make a business recovery plan and ask yourself:
- In the event of a catastrophe, can I start a business somewhere else?
- Can I buy a partially manufactured good and adopt it in some shape or form to keep my production going?
- What do I do about my staff?