Why small businesses use an insurance broker

/in , , /by

Small business owners tend to be born optimists with little inclination to think about what could go wrong. That’s why it pays to have an insurance broker in your corner to safeguard what you’ve worked for.

Paul Harrison’s family-owned shoe shop in Sydney’s Neutral Bay has operated out of various locations for more than half a century. It’s used insurance brokers for the past 35 years.

“When I came on board, we already had insurance but not at the level we needed,” says Harrison. “Most of the insurance we had was good, but it took time. If we made a claim, an assessor would come along; then he’d send you forms to fill out before repairs could begin. All that time you’re not trading.”

Save yourself time

Anyone who has compared car, home or health insurance policies to try to find the best deal knows how time consuming it can be. Choosing a business insurance package is even more complex because of the range of risks requiring cover.

A business insurance broker will not only save you time sourcing the right policy, they can also save time and money if you need to make a claim.

That was Harrison’s recent experience with his long standing Steadfast insurance broker.

“We had a leakage from the residential unit above our premises that ruined our ceiling, stock and floor. With rent and wages to pay, you can’t afford to be out of business for two months. Our business insurance broker was onto it straight away. We were able to replace our flooring within two days and probably missed five days’ trading in all”.

Utilise your business insurance broker’s experience

Small business owners are great at what they do, whether it’s running a café or a consultancy. But they are rarely insurance experts. “What they may not understand is the broad range of risks they face,” says Dallas Booth, chief executive of the National Insurance Brokers Association(NIBA).

A business insurance broker will help identify the risks your business faces, then get the insurance package that matches those risks. “There’s no point buying a business package off the shelf if it only covers some of your risks,” says Booth.

“I don’t think you can do that on your own. You may think you know what can go wrong but you never realise how much [an adverse event] impacts on your business going forward,” says Harrison.

Read the full Steadfast article here. 

Across the Claims Desk

/in , , , , /by

Offbeat, unusual claims that cross insurers desk‘s everyday!

SPLASH OF PAINT

Unrestrained items in the back of a vehicle can cause more damage than a collision. The claimant driver of a car had a minor collision resulting in tins of paint on the back seat moving freely around the inside of the vehicle, flipping their lids and coating the upholstery with an attractive but unwanted colour scheme. The cost of replacement of the interior resulted in the car being uneconomical to repair.

Outcome: Car written off. Claim accepted.

PLASTERED!

Dinner at home was an interesting occasion for one family when parts of the ceiling fell in on them. It seems that the glue holding the plasterboard ceilings in their older home did not have a lifetime serviceability.

When their house was built, ceilings were held in place by both screws and glue and if there was a shortage of screws, the ceiling fixing would rely on the glue, which can deteriorate over time.

Generally, unless there has been a contributing factor e.g. water ingress, these repairs tend to be excluded under ‘wear and tear’ gradual deterioration exclusions.

Outcome: Claim rejected.

UNBROKEN… BUT REPLACED ANYWAY

With the recent replacement of many hail damaged roofs in the Brisbane area, it is interesting to note that whilst many solar panels survived the impact of the hail, some had to be replaced anyway because were not fire rated.

Outcome: Claim accepted.

Work Experience Liability

/in , , /by

Differences in Liability

When employers provide work experience to school age students and unemployed people there are distinct differences with liability issues between the two groups.

With school students the employer is normally indemnified by the school that the student attends, together with relevant State Government authorities indemnification, in respect of any injury sustained by the student during the course of work experience.

That situation isn’t the same when it comes to providing work experience to unemployed persons to help them gain future employment in the workforce. Authorities such as WorkCover Queensland specifically exclude coverage for ‘non paid’ employees, other than full time school students, under the employers normal WorkCover Queensland Policy.

Employers should advise their insurance broker of their work experience engagement practices so that the existing Broadform Liability Insurers are made aware of the circumstances and can extend their Policies accordingly to note the inclusion of unpaid labour.

Employers should also advise the ‘unpaid worker’ of the potential exposures should they suffer a workplace accident or incident that results in their own injury. Consideration should be given to other policy coverage.

Policies such as Personal Accident & Illness or a similar product may then indemnify the ‘unpaid worker’ against injury or illness.

In all cases it’s prudent for any insured person or business to advise their insurance broker of any material changes to their business operation so that
the Insurers are made fully aware and coverage can then be tailored accordingly. 

Good Staff

/in , , , /by

How Do You Keep Them?

The common misconception is that all you have to do is pay well. Many studies have found that this is simply not the case… in fact, it generally comes in around third or fourth on the employee list of ‘job satisfaction’ priorities. Paying a fair and reasonable salary is expected but of high priority is the need to provide a great company culture. What that really means is provide a great company atmosphere. Make it a happy place to be and strive to create a culture where everyone gets along and helps fellow employees – cultivate real team spirit. Also have a company-wide rule – ‘always do the right thing by our clients’. Maintain a positive ethos at all levels of the business and recognise the value of good humour.

Doing as much as you can to create a great atmosphere at work goes a long way to retaining quality staff.

On the relationship building and work side of things, here are more suggestions to help develop the desired culture in your business:

Get to know your staff: Although you need to be mindful of privacy considerations, try to find out what drives them…. different people have different triggers and finding out what they are will help in your relationship.

Develop their skills: Training is a critical factor, as it not only provides benefits for your business but also identifies a career path for them and can help develop their aspirations.

Engage them in the business: If people feel connected with the values and direction of the business, they will be comfortable putting forward their views. By having the opportunity to ‘have a say’, they see that their work and they themselves are important to the business. It takes appreciated, valued employees to ensure long-term success for any business.

Provide feedback: Not just the traditional annual Performance Review and measuring of KPI’s… it’s an ongoing position of providing feedback; positive and appreciative feedback when it’s due and swift course correction in areas that need improvement.

Remember, times change, so don’t expect to keep good staff forever. It’s unlikely that you will be able to offer the flow of opportunities that the really good ones will be seeking. But they will contribute their energy and passion while working with you, provided you fulfill your side of the relationship.

The Cloud

/in , , , /by

What is it? Where is it?

In the simplest terms, ‘cloud computing’ means storing and accessing data and programs over the Internet instead of on and from your computer’s hard drive. ‘The cloud’ is just a metaphor for the Internet. There is no real, puffy white cloud involved; it’s just a 3rd party service provider’s server, somewhere.

When you store data on or run programs from your computer’s hard drive, that’s called local storage and computing. Everything you need is physically close to you, which means accessing your data is fast and easy (for that one computer, or others on the local network). Working off your hard drive is how the computer industry functioned for decades and some argue it’s still superior to cloud computing.

The cloud though, is not about the hard drive in your desktop computer or hard drive server in residence.

To use the cloud you need to access your data or your programs over the Internet or at least have that data synchronised with other information over the Internet. With an online connection cloud computing can be done anywhere and at anytime on smartphones, pads or tablets as well as desktop computers.

The serious business, and where the money is, is in the cloud-based software programs. These include ‘Software as a Service’ (SaaS) where businesses can subscribe to an application over the Internet (examples: Adobe Creative Cloud, Salesforce.com). There’s also ‘Platform as a Service’ (PaaS) where business can create its own custom applications for use by all in the company. And of course the major players who offer ‘Infrastructure as a Service’ (IaaS) where companies like Google and Amazon provide the backbone that can be rented out by other companies as a platform for their services; Netflix being one, a customer of Amazon cloud services and due to launch in Australia in March this year.

Cloud computing is big business. Global management consulting firm, McKinsey & Company claims that 80% of the largest companies in North America that it surveyed are either looking at using cloud services – or already are.

The cloud in its many forms is an exciting development but it also creates new types of challenges in protecting sensitive information assets. A business-focused risk-management approach enables companies to strike the right balance between protecting data and taking advantage of more efficient and flexible technology environments.

Underinsurance

/in , /by

Surverys Reveal Alarming Statistics

Probably due to the harsh reality of the current economic climate, it is estimated that 1 in 6 small businesses have no insurance of any kind. Of businesses that are insured, half of these are insured for only 60 to 85% of Replacement Value. And it gets worse with the revelation that between 17 to 25% of ALL small businesses are under insured and risk business failure following a serious insurable event.

The most alarming part to Underinsurance is that it’s predominately discovered at the time of a claim or loss, which by then is too late to rectify. This has been demonstrated on many occasions over recent years following major events such as floods, storms, bushfires and cyclones.

Underinsurance may impact a wide number of General Insurance Products, including but not limited to:

  • Home & Contents Insurance
  • Commercial Motor Vehicle Insurance
  • Strata Insurance – both Commercial & Domestic
  • Business Insurance
  • Industrial Special Risks (ISR) Insurance
  • Marine Insurance – both Leisure & Commercial Hull
  • Transit Insurance
  • Liability Insurance

Under these named Policies there are also Policy ‘Sub Limit(s)’ in areas such as: 1) Removal of Debris; 2) Reinstatement; 3) Extra Costs of Reinstatement; 4) Business Interruption; 5) Care Custody and Control… and all need to be considered when tailoring specific insurance contracts. These Policy areas will be discussed in more detail in future editions of Brokerwise.

There are Insurer Guidelines that provide both Underwriting and Claims considerations once Underinsurance has been discovered. Different insurers have varying degrees of Underinsurance impacts to Insurance Policies and these are always displayed as part of the Policy Coverage Terms and Conditions provided.

That is why it’s imperative and prudent to constantly review your Policy Limits and sub limits as part of an on-going risk management strategy. This shouldn’t just occur at Policy Renewal as asset value increases, renovations or upgrades etc., may have occurred during the Policy ‘Insurance Period’. These reviews should be done in consultation with your insurance professional to ensure your Limits of Coverage are adequate. Don’t wait until you make a claim to find out they are not.

There are many considerations when selecting Policy Limits and there are professionals such as builders who are aware of building costs and any standard changes to the Building Codes that may assist.

Property and Business Valuers are also a real asset when setting figures. Specialist insurance areas such as Business Interruption may require the assistance of accountants or financial advisors, or both, to ensure accuracy.

It’s a sensible approach to discuss Policy Limits following any purchases or disposal of assets and a sound practice to ensure that your level of coverage represents a minimum of Replacement Value.

Remember, it’s too late once a claim occurs to say, “I should have phoned my Broker to discuss….”

ATO turn the spotlight on employees as contractors

/in , , /by

The Australian Taxation Office (ATO) has stated their intention to increase their audit focus on businesses that use contractors.

An incorrect employment classification of an employee / contractor could be a breach of both ATO and Workers Compensation legislation.

If ATO determine that your contractors are employees, you would have a shortfall in your Superannuation and PAYG payments and subsequently incur interest and penalties. In theory ATO can go back an unlimited period to collect the superannuation and PAYG for employees.

In past years there was confusion for business owners about the definition of a worker as the ATO definition was different to WorkCover Queensland’s definition.

Today the definitions have been aligned. WorkCover Queensland has adopted the same definition as the ATO who supply a simple online decision tool to identify ‘Employee or Contractor’.

You can check your circumstances by logging on to:

http://www.ato.gov.au/Calculators-and-tools/Employee-or-contractor/

You are asked to answer a series of questions

  • Is there an Agreement in place with the individual
  • Occupation of the individual
  • Does the individual have an ABN
  • Details of Subcontracting arrangements
  • Basis of payment for services
  • Responsibility for provision of equipment / tools
  • Who is responsible for Rectification of work?

At the end of the questionnaire a decision is provided based on answers given. You are able to enter personal details and a report can be produced for you to print /save. Retain a copy for your records and if audited, you have a documented basis on which you made your decision.

An important factor is the existence and content of a written agreement between you and the individual. You should consider obtaining legal advice in regard to any contractor’s agreement.

It is important to discuss all your labour arrangements with your CQIB insurance broker as contractor or labour-hire alters your exposures hence the need to tailor your insurance program to your specific needs.

 

Insurance: The Broker’s Role…versus supermarkets and other direct vendors

/in , , /by

There is a significant push on selling insurance products through mainstream retailers. Their foray into insurance is a calculated move that relies heavily on the established reputation of these retailers to provide convenience and savings in commoditised household goods.

It’s a tactic popular with banks as they design products that will try to cater for all financial of their customers, and thereby, keep them ‘in house’.

So what’s the difference between insurance brokers and the direct sellers?

Both earn a commission from the placement of cover with the insurer. The product the client receives is only as good as the results when it’s needed at the time of a claim. The role of the insurance broker is to provide professional, advice-based service that represents the client’s best interests. The broker has a suite of product options available depending on clients’ circumstances, cover requirements and affordability.

The direct market relies on promoting a cheaper product as the bottom line. This is heavily supported by mass media advertising that keeps the subject matter in their campaigns light on detail and high on entertainment value – think of domesticated aliens, man folding underwear at counter, French girl struggling with Aussie accent, happy customers portrayed by actors etc. The product is deliberately made cheaper by using strict acceptance criteria and restricting policy coverage and benefits.

A recent study by Vero Insurance surveyed business owners as to why they prefer to deal with a broker. A common theme in the feedback was that a broker would see many claim scenarios and may be able to suggest the most appropriate cover based on previous experiences. This gave business owners more confidence rather than trying to understand the complexities themselves.

An important factor in any insurance buying decision should be how claims are settled. Brokers often recommend insurers based on their ability to provide excellent claims service. Insurance contracts and claim settlements can be complex and having professional guidance through the process is invaluable. Policy wordings often have limits, sub limits, conditions and exclusions that can potentially create situations where confusion reigns and the insurance industry is perceived as untrustworthy and deceitful.

The broker has the ability and responsibility to eliminate this confusion and provide the most suitable product for the clients’ needs.

If price is ever the single most important criterion in the insurance buying decision, then there can be benefits in using direct market insurers. However, always bear in mind that when price is optimised, the quality of cover usually suffers. Cheaper policies have strict acceptance criteria and the retailers’ call centre consultants have scripts to follow. The highly regimented and efficient transaction process is designed to deal with the large volume of phone calls. Closing the deal is likely to be the number one priority.

Fire doesn’t discriminate

/in , , /by

As the chills start settling in, we all need to be conscious of the winter fire season. Every year people die as a result of fires in the home. Statistics show the majority of house fires occur at night when people are asleep. Most are preventable.

In a fire, you may only have a few minutes from the sounding of the smoke alarm to when your life is seriously threatened by fire or smoke.  It makes sense to prepare for the worst by practicing an escape plan, making sure that everyone knows what the smoke alarm sounds like, and that everyone in the household knows what to do in an emergency

When you go to sleep, your sense of smell also goes to sleep. If there is a fire, toxic fumes may overcome you before you wake up. The piercing shriek of a smoke alarm can provide the seconds and minutes of valuable time you need to get out of the house during a fire. Think about…

  • Installing an adequate number of suitable smoke alarms and testing them regularly.
  • Having a written escape plan in case of a fire and practicing it.
  • Never leave cooking or any other open flame including candles or oil burners unattended.
  • Make sure keys to all locked doors are readily accessible in case you need to escape.
  • In the colder months, take extra care when using heaters, electric blankets or open fires.
  • Portable heaters should always be placed in a stable position, and a safe distance away from bedding, clothing, curtains and tablecloths.
  • Always keep lighters and matches away from children.
  • Regularly clean your clothes dryer. Clean the lint out from the filter in the dryer.
  • Oil, gas or wood heating units may require a yearly maintenance check.

All homes have different requirements so if you’re not sure, look into the free Safehome service, a program whereby you can invite local firefighters to assist with your fire and home safety needs. This initiative is free service provided by Queensland Fire & Rescue Service in the interest of developing a safer community. Contact 13 74 68 for more details or visit the website.

Your home and everything you treasure deserves proper protection. In addition to having safety practices in place, be sure to speak to your insurance broker who can provide you with the right insurance solution for home and contents, ensuring your peace of mind.

https://www.fire.qld.gov.au/communitysafety/freeprograms/safehome.asp