Engaging brokers early in decision making
While business changes are commonplace, insurance and associated risk management practices appear to be an afterthought for 41%, which could leave businesses exposed to increased levels of risk, new risks and even add to the likelihood of being unable to get the insurance cover they need.
So, what can brokers do to help clients during times they are considering these types of changes – rather than only helping once changes have been made?
Calling at the right time averted a crisis
When taking part in a broker panel discussion during the Vero SME Insurance Index Webinar, Adrian Johns (Marsh Australia’s Head of Authorised Representatives) shared a story of how he was able to help a client at a time when changes were being considered.
A client came close to making a seemingly innocuous decision about materials used for the roofing of his farm’s chicken sheds. However, the product the business was opting for had significant insurance implications due to it being EPS (expanded polystyrene sandwich) panelling.
This highly combustible panelling presented a serious fire risk which may have proved challenging at renewal time. Luckily, Adrian happened to call in at the right time and was able to help influence the roofing material choice and eliminate the risk.
In these interviews it is apparent not all clients are aware of the benefit of engaging their broker early when considering changes or during the decision-making process – but once explained they do see value in this.
Brokers have an opportunity to work closely with clients to identify upcoming changes as early as possible. To then be able to add value and help implement risk mitigation strategies and recommend changes to decisions, and insurance cover.
Building effective risk management into the decision-making process is key, rather than being a potentially more expensive and more complicated afterthought.
The product or service offering changes or expands
This can influence headcount, values at risk, property, infrastructure, costs, and ways of working – which can bring new or different elements of risk and have an impact on insurance cover. Decisions being made about things such as property acquisitions and renovation materials once made are hard to reverse and expensive if deemed as necessary. A broker can help identify what should be considered to reduce risk and benefit insurance cover before all is set in stone.
The size of the workforce increases
As a business grows, the number of staff often grows proportionally – whether these are full time employees, part timers or contractors. A broker can help ensure business owners and decision-makers know what additional risks can come with new hires. Research for the Index found that issues related to employees is a key area of concern for 58% of all businesses – increasing to 88% for businesses that employ between 200 and 500 people. I can pay to note that contractors present a higher risk to business, and therefore warrant a more stringent risk management program. Refer to our RM Insight issue 99, Contractor management – understand the risk and the fundamentals of risk control and RM Insight issue 100, Contractor management policy – fundamentals in a checklist for more information.
Economic factors change revenue or costs
You only have to look at the sharp rise in inflation over recent years to understand just how economic factors impact businesses of all sizes. Cost can be a key driver of insurance decision-making, so brokers have an opportunity to educate clients about the value of risk mitigation despite additional costs that may be required – as well as any potential long-term financial benefits. With economic concerns being the number one concern for 61% of businesses, this is a key area for brokers to engage early and speak to the value of decisions that reduce risk.
Renovating or moving to another business location
Changes in the location or design of a premise – including any equipment, transport, or infrastructure the business needs to operate – can impact potential risks and the insurance cover required. Elements a broker could help businesses assess and plan for include the use of certain structural materials when renovating, or the risk of extreme weather events and natural disasters in a potential new location. Early broker engagement can aid decision making. This could be in relation to the potential use of highly combustible or non-standard building materials, choosing a new location within a flood plain or bush fire-prone area, or if a new product includes flammable liquids. When making these types of business changes, there are alternatives available that could reduce risk.
Taking the next step
When it comes to helping clients of all shapes and sizes, brokers can be best placed to engage with issues regarding risk and cover as early as possible – helping to mitigate risk. There’s a diverse range of opportunities where brokers can be relied on as trusted experts.
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