Understanding the Impact on Your Clients
Many of our accountant contacts have asked us in the past few months for our overview of the insurance market, our forecast on premium increases and the availability of cover so that they can best advise their clients. We have decided to take this opportunity to deliver a quick overview and provide you with an appreciation of the service Campion Insurance can provide.
Which sectors are experiencing the greatest increases?
The main issue is third party injury claims. Any business that has either a high footfall of customers, a workforce engaged in mid to heavy manual work, or organisation with many motor vehicles has seen very significant increases. The typical sectors that would have seen the highest increases are pubs, supermarkets, haulage and heavy manufacturing.
Have all firms in these sectors seen equal increases? No – increases have varied and are strongly influenced by the following two factors
- Claims – any business that has suffered claims has seen a significant increase in premium. This can be either by their existing insurer applying rate premium increases or, their existing insurer not offering renewal resulting in their insurance being moved to a new more expensive alternative provider.
- Business Growth – businesses that have grown at a greater rate than average are seeing a more significant increase in their premium i.e. the greater your turnover and staff headcount, the greater the risk and subsequent increase in your premium
What is the outlook for premium increases in the next 24 months?
We believe that property and private motor premiums will be substantially stable. Nevertheless, there is likely to be further premium increases for both public and employers liability along with motor fleet insurance. The driver for these increases is very limited demand amongst insurers for this type of business and many still appear to be losing money on these classes.
Are premium increases outside the control of your clients? Many of the aspects of premium increase are outside your clients control (i.e. claims culture and cost of claims etc.). However there are two key steps that your customers can take to ensure they control their insurance costs as far as possible:
- Risk Management – focus on reducing the risk of incidents occurring which may lead to claims. Insurers who see strong risk management practice will consider your client’s business more attractive
- Consider your insurance renewal now – many of your clients may only consider their insurance renewal in the month before their renewal date. This approach significantly reduces their ability to positively manage their insurance costs. We believe that all medium to large clients should seek a mid-year review with their insurance broker and request a copy of their verified claims experience for that meeting so they have a full appreciation of their claims.
Are the insurance challenges for my clients only the increasing premium? We believe that there are two other hidden challenges for your clients:
- Excesses (the amount the client must bear in each claim). With the migration of business to UK markets, many clients have seen the application of higher excesses. This effectively increases the cost of each claim to the client.
- Restrictive Cover – many clients will have changed insurers and this quite often leads to more onerous conditions applying to their policy. The insurance broker is obviously obliged to inform their clients of all the policy requirements. Nevertheless, we believe that it is vital for clients to ensure that they are fully compliant with these policy requirements. If for some reason that they are unable to comply with these policy requirements, they will need to re-negotiate this with their insurer.
Campion Insurance provide the following services to accountants and their clients:
Complimentary Second Opinion Service – full review and pricing of your client’s insurance requirements
Risk Management Seminars – we provide regular risk management seminars at our offices (or subject to demand/attendees) at your office
Contractual and Regulatory Requirements – check to ensure your client is compliant with their requirements