Insurance brokers urges SMEs to ‘check insurance premiums more often’
A study carried out by insurance broker, Get Indemnity, showed that of 650 SMEs polled in the UK, around 68% had not requested a new quote upon renewal, causing many to overpay for their business insurance premiums.
Small businesses with under 50 staff were the worst offenders, with as many as 76% not requesting new or alternative quotes in the past 3 years, with 42% not seeking alternatives in the past 5 years.
The survey showed that policyholders saw no reason to check their insurance premium because they saw no reason to change, trusted their insurance broker to provide a fair quote or because their policies were automatically renewed.
Simon Taylor, the managing director of Get Indemnity, urges SMEs to check their premiums at the end of the year, specifically given the uncertainties surrounding covid-19, where people could be paying a lot less than they need to, or maybe need a lot more cover than before.
Taylor explained “the study wasn’t necessarily surprising when we consider SME’s engagement. However, when we combine the results with average reductions in premiums over the past five years, this means these SME’s could be missing out on cost savings between 25% and 45%.”
He continued: “During these unpredictable times, a lot of companies are going to be going through major transitions in terms of staff, overheads, risks and requirements. People are driving less, going to be working from home more and there are different risks and liabilities to be aware of.”
This survey carried out has supported the FCA’s Thematic Review that confirmed that 40% of SMEs in the UK could be underinsured, especially during times of covid-19. A particular threat is if companies have underinsurance and cannot claim on any covid-related incidents. 68% of respondents were not insured against cybercrime and 38% did not have any management liability insurance.
For many small businesses, they are happy with their initial insurance quote for things like public liability and professional indemnity. If they do not claim for the year, they are happy to renew with the same provider and pay the same price, not realising that they may be able to save substantially if they are deemed a lower risk.
Equally, there may have been drastic changes to their business or external factors in the last year and covid-19 has triggered this conversation. Certainly, if the majority of your staff are working remotely, do you need the same level of insurance on your premises?
There is administration involved with changing insurance policies and getting quotes and this can be off putting for most business owners. However, it could be more economical and provide valuable cover to an organisation.
Business owners can speak to their existing insurance broker or a new company and ask for a new quote. It may be worth getting several quotes before making a decision. Savings can also be made by requesting to make one payment for the full year, rather than monthly, since there is an added cost for this. Speak to your broker about a no claims discount if you have not made a claim in several years and also any other factors such as changes in turnover, cost of production or added security to your premises.