Business owners want nothing more than to ensure their business is protected against all risks, be it natural disasters, crime, or legal challenges. However, the affordability of business insurance is something that deserves particular attention from SME operators.

Over the past year, a combination of global events and economic factors have led to increased insurance premiums, making the matter of affordability an increased focal point. Greater natural catastrophe losses incurred recently by insurers, higher costs of goods and services, limited reinsurance capacity and supply-chain issues have all contributed to rising insurance premiums. The average cost of an insurance premium has increased year-over-year, with commercial insurance seeing an increase of 10-15% (before factoring in claims losses or changes to the insured risks).

Businesses are facing a range of economic challenges such as skilled labour shortages and higher interest rates. As such, it is important to consider the measures that may be taken to improve your business insurance affordability.

How Conducting a Risk Assessment for Your Business Can Improve Business Insurance Affordability

Most business owners will err on the side of caution and try to obtain the greatest insurance protection possible. However, this can lead to expansive lists of potential insurance policies that business owners must make sense of. Businesses should prioritise certain risk mitigation measures; some insurance coverages will be more appropriate for individual businesses than others.

For example, a civil contractor carrying out excavation works may consider a cyber insurance policy, however, public liability, plant and equipment, and general business cover will be much more pertinent to the protection of the business. As such, these types of cover should be prioritised over more ‘secondary’ risk exposures, such as cybercrime.

When it comes to assessing insurance affordability, it is helpful to think through what risk exposures at the core of business operations need to be prioritised. To do this, it helps to consider what ‘secondary’ or ‘minor’ risk exposures can potentially be addressed via means other than insurance. For example, a civil contractor may reduce their cyber risk by carrying out bi-annual cyber security awareness training with admin staff as opposed to ‘transferring’ the risk to an insurer with cyber insurance.

Your insurance broker can help you conduct a risk assessment for your business and recommend the most appropriate risk management and insurance measures to ensure your business is protected with essential coverage while optimising business insurance affordability.

How Working with a Broker Can Improve Business Insurance Affordability

The services offered by quality insurance brokers include an assessment of your business’s risk exposures, considerations on strategies to manage, mitigate or transfer these risks, and consultation around the insurance protections that your business may or may not need. Brokers will also engage the insurance market to ensure that the premiums provided are competitive and reasonable given current market conditions. This will ensure the expense of a premium on your business is not greater than it needs to be.

The labour and resources spent managing insurance claims within a business is another aspect of insurance affordability that is often overlooked. For example, a complex claim may involve hundreds of hours of administrative work, correspondence and negotiation with multiple parties including one’s own and third-party insurers, legal representatives, loss adjusters, trades, accountants and more – a substantial outlay in people power to an SME operation.

When utilising an insurance broker as your intermediary, businesses can be freed from all management of insurance claims and the engagement with the multitude of parties involved in claims. Additionally, claims outcomes can often be drastically improved when managed by brokers due to the experience, skillsets and close working relationships with insurers leveraged by brokers.

How Premium Funding can Optimise Business Cash Flow

AtA part of the challenge of navigating business insurance can be the hefty lump sums required to be paid towards annual renewals of your insurance program. These are often among the largest expenses paid by businesses.

Insurers can often provide the option for policy premiums to be paid in monthly instalments over the course of the year. Considering this option can help to avoid the toll of large one-off capital outlays that your business may not have immediately at hand.

These options do typically include additional financing and administrative costs but are a testament to our understanding that affordability is not the same for all businesses and that insurance and risk management solutions must be crafted with care towards each client’s individual needs.

Engage with PSC Insurance Brokers to Enhance Business Insurance Affordability

Ensuring business insurance affordability can free you from unforeseen financial constraints, allowing you to focus on the day-to-day management of your business operations. PSC Insurance Brokers understand the requirements of your business will be unique to your circumstances and work together with you towards managing an insurance program that is both affordable and provides the necessary risk mitigation your business needs.

Contact us today to assess your commercial insurance requirements and strike that optimal balance between safeguarding your operations and maintaining business insurance affordability.