Commercial insurance is more complicated than insuring yourself on a personal level. Let’s take property insurance, for example. A private property insurance policy is put in place to protect you, your possessions, everybody that lives in your home, as well as any visitors etc, in relation to your single property. On the other hand, a commercial property policy applies all this to a wide variety of aspects – workers, third parties, customers, deliveries, dangerous chemicals etc. – and potentially across multiple locations with properties of different sizes and types of construction etc.
There is a comprehensive method that can help you get all the best premiums while still helping you save money. This is the essence of Buying Insurance Holistically.
The holistic insurance approach is a formidable method that can help you come out on top with your commercial policy. To get started, however, let’s talk about the differences between typical and holistic insurance purchasing methods.
The Typical Approach
Here’s how the insurance purchasing process happens for many, if not most businesses.
Up to four months (sometimes as even as late as 1 month) prior to the insurance renewal, an insured company starts to fill out various forms and tenders for their renewal. They create an application document and do a brief rundown of potential insurance partners. In most cases, the company will choose to go with the insurer they’ve worked with up to this point. The application is then presented to the insurer. In the best-case scenario, the insurance company will agree to the previous deal with the company.
In most scenarios, however, the insurer will increase the premiums, little by little. Over the years, the company in question ends up paying much more than necessary.
The major pitfall of the typical approach is a failure to realise how the insurer views the company’s risks.
The Holistic Approach
Firstly, the holistic insurance purchasing approach doesn’t rely on blatantly filling out forms. It examines a company’s situation. Before anything else, therefore, you should take a look at the insurers themselves – it’s long overdue.
The Holistic Approach – Explained
Now that you know what holistic approach is not about (whatever the typical approach is based on), it’s time to dig a bit deeper. Whether you’re looking to better your commercial property insurance policy or want to take the insurance matters out of the insurer’s hands and into yours, we are sure that the holistic approach will help.
It All Starts With Insurers
In your own business, to understand the wants and needs of your clients/customers, you need to think like your clients/customers. Similarly, to make sure that you’re doing a good job at purchasing insurance, you need to take a look from the insurance company’s perspective. The biggest source of insight into the insurers’ thought processes is their SFCR (Solvency and Financial Condition Reports).
According to Solvency II, every insurer is obligated to make their SFCRs available to the public. If you know where to look and what to pay attention to, the SFCR documents can be invaluable.
From the buyer’s perspective, your insurer’s SFCR is a window into their financial structure and strategy. This gives you an idea about the insurer’s motivations, allowing you to cater to them individually.
Look into Your Past
Make no mistake; your past actions will affect your premiums. The thing is, though, clients tend to vastly overestimate the impact of their past on the insurer.
Understanding some core concepts that the insurers pay attention to is essential here. For one, claims data is very predictable and reliable – study it and learn how to use it. Make sure that you understand your core risk metrics, for example, severity and frequency. More importantly, try to figure out how these core metrics appear to the insurer.
Look into Your Future
Never make impulsive and emotional insurance purchasing decisions. In commercial insurance, no one wants to be held responsible for disasters, so they run towards insuring all possible scenarios.
The main point here is not that large claims are extremely rare (although they are). It’s that they are highly predictable (and usually easily affordable over the long-term from accumulated premium/IPT savings).
Now, this is not to say that all insurance is irrelevant. However, according to the holistic insurance approach, the buyers should educate themselves about what they’re buying and learn how to make decisions that are both smart and safe, both in the short-term and long-term
At the foundation of the holistic insurance method lies an insurance company that’s ready and willing to come up with a custom policy for you. This speaks a lot about the insurance company – do they see you as a mere number or do they want to make sure that you are happy, protected – and feeling like you have a good deal? The former is a deal-breaker for many of our clients.
Holistic Insurance Solutions
Hopefully, this brief insight into the essence of Buying Insurance Holistically has sparked your interest. If you care about how much money you spend, you’ll want to take this approach. Businesses often throw money at insurance companies just because they don’t want to get too involved in the process.
We aren’t advocates of the mentality of ‘throwing money at every problem’. We think that every aspect of your business deserves better attention. Your insurance premiums are definitely not something to turn a blind eye to and just throw money at. Buying Insurance Holistically can help you get all the best cover while still helping you save money on premiums.