What You Can Do to Stop Your Premium Increasing
The gross written premium for general insurance jumped 8.7% in the 2020-21 financial year. This includes commercial policies. With such a hardening market for premiums, how can you minimise the anticipated premium rise this financial year?
Why your insurance premiums increase
Insurers calculate premiums by reviewing the risk factors of your business as well as those in the broader economy. Many reasons underpin the premium price rise, even if you haven’t recently claimed on your insurance. Those factors include:
Inflation
Changes in taxes, duties, or levies, whether from local, state, or federal governments
A change in your business operations that affects your risk, such as installing a CCTV-alarm system to reduce theft and vandalism
The influx of claims from natural disasters
A deluge of claims from other policyholders in your sector
Insurers’ investment returns
Changes in the quantity or value of what you’re insuring.
As well, insurers’ costs are very cyclical. There may be regional and global changes impacting the price and availability of reinsurance. That’s cover insurers take out to protect themselves against their exposure to the risk of disasters or other significant events. So premium changes reflect the insurer’s cost of doing business.
Improve security measures
It makes sense if your business puts in place measures to reduce its risks. This will lower the risk of you claiming on your insurance. In this case, insurers are more likely to agree to a lower premium.
Try these measures:
Install or upgrade your existing alarmed security system for your premises
Boost your cybersecurity protection
Invest in extra security for your high-value goods such as laptops, stock, money, etc such as by locking them up or storing them out of sight overnight
Considering having panic button options for your security system
Install a sprinkler system in your office, warehouse or other production areas and other fire detection functionality
Develop a system to periodically review your risk assessment, incidents, accidents and near misses to fine tune your risk minimisation strategy.
Minimise risks
Keep your staff updated with their work safety training, and program regular refreshers. As well, make your mark on the workplace culture by encouraging healthier behaviours such as a no-smoking policy, offering perks such as on-site yoga classes or gym memberships. These moves could indirectly impact upon the wellbeing of your staff and therefore reduce health-related workers’ compensation claims.
Lock in your premiums for the year
If your cashflow allows, pay your insurance premiums annually rather than monthly. Paying yearly saves you up to 8%; half-yearly, up to 3%. However, not all insurers penalise you for paying monthly; we can check the difference for you at renewal time.
Regularly evaluate your policies
Get into the practice of reviewing your policies at least quarterly, and when you:
Experience a significant change in your circumstances, such as taking on less risky or riskier projects
Your business is on a growth trajectory
Make substantial capital purchases, including business equipment and vehicles
Your business operations change
Your hire/lose staff.
You could save money by updating your insurance cover. For example, if your revenue is slimmer than expected, then updating your policy accordingly could earn you a part-premium refund.
Give these ‘nips and tucks’ a go to ensure your insurance cover is the best fit and you’re not paying a higher premium than needed. Be sure to reach out to us for further guidance to customise your policies to your current circumstances. Often, bundling your insurance policy in a package through us will deliver an extra discount. That’s a great move to ensure your policies don’t overlap.
You’re now up-to-date on how to minimise your hit from the anticipated premium increases. Time to update us.