Managing insurance costs

Managing insurance costs

Managing insurance costs First disclaimer, I do not sell insurance. Our firm does provide insurance solutions through our ManageRISK division, but I am not involved in the day-to-day client activity.

This blog is written from the perspective of someone who pays insurance premiums. No doubt like many of you, the occasional thought creeps in that it would be nice not to have to pay for it.

Most of us are looking at our P&L’s with the view to reduce costs. It should be a regular exercise and given the current lock-down, it has an extra emphasis.

You come to the insurance line…

There are numerous things to note here before deciding to reduce your cover. I use myself as an example.

• My Risk: I have insurance to cover a risk and this applies to all my insurances (human, business, fire & general). By and large the risk hasn’t disappeared due Covid 19 (at best been delayed whilst we are in lockdown) so personally I am not keen to stop any of my cover.

• Insurance Company Risk: the short-term risk for a lot of our insurance companies has changed i.e. vehicle, plant & machinery, etc that are sitting idle, but we are paying a premium on the notion they are being used. Think of your own car sitting in the driveway. What is the risk? There are a lot of motions underway by insurers to reduce premiums as a result.

• Broker: At times like this I rely on my Broker to be my mate – someone that goes into bat for me when I need help. I appreciate this isn’t a claim, but I don’t think that shouldn’t matter. If I need to reduce my costs than I think that is a genuine need and the Broker should go into bat for me with the insurer.

From my research I note most insurers have put together relief packages to help their clients keep their cover during this period. Two of the common ones include:

1. Premium Holidays: you don’t have to pay your premiums for a set time period (i.e. 2 months) but you will be fully covered and able to make claims.

2. Premium Suspension: premium payments are put on hold for a certain time (ie. For 6 months) but you have no Insurance cover during this period and cannot make claims.

There is a third option that insurers probably will not promote publicly, but may be of use to you.

• Missed Payments: Insurance companies like any business will allow a few missed payments before they cancel your policy. There is scope to do this and then put in place a payment plan to cover the arrears. A practical solution. The advice I would give is to talk to your Broker.

If you want a second opinion, I can put you in touch with our ManageRISK division.Simon Fisher is our go to and he can be contacted on 021 956 156 / risk@managecompany.co.nz