Reducing underinsurance with risk management
Underinsurance has been identified as a longstanding issue within UK businesses by many insurers. In fact, according to Aviva’s latest risk insights report [1], as many as 50% of businesses in the UK are underinsured in some capacity, with more than 40% having neglected to check their cover for three years or more. Of course there are a number of reasons for this.
With rising inflation and increasing fuel prices, there has been a significant impact on the price of goods themselves, and raw materials are taking longer to get to where they need to be. Alongside this, many businesses haven’t had their assets properly valued for several years because of the Covid lockdowns. The pandemic also led many firms to completely reassess how they operate, which changed the nature of their risks, which haven’t been relayed to insurers. For these reasons, underinsurance is a critical risk.
Risk identification and effective management of those risks is vital in any business, which should include updated valuations. If businesses can ensure they understand the rebuild costs of their property, the time it will take to rebuild, and the availability of contractors, as well as considering the costs to replace machinery, stock and equipment, they can reduce their risk of underinsurance significantly.
Identify and manage risk
By identifying and managing risk, businesses can minimise loss and recover more quickly should an incident occur, meaning the risk of exceeding sums insured and indemnity periods can be reduced. However, with inflation increasing and rising costs, many business owners are neglecting not only investment into risk management procedures, but they are also not checking their insurance cover levels, fearing potential higher premiums, at a time when they can be least afforded.
At Barnes Commercial we believe that risk management plans and the right level insurance cover should be a top priority for any business. With thorough risk management plans in place, the workplace is safer; there are less accidents, claims and time lost to inactivity. A solid risk management strategy makes a business not only more productive but also more attractive to insurers, which can result in the overall reduction of insurance premium costs.
To support this, a recent article [2] written by Insurance Age in association with Aviva, explains how effective risk management can benefit your business in the long term. The article discusses the importance of obtaining valuations of property, equipment, and stock. It features a case study on how a business involved in metal working used risk management to improve the overall productivity and profitability of the business.
Download the article today and learn how effective risk management can help your business in reducing potential underinsurance.
1 Data from the Aviva Risk Insights Report 2023. Research was carried out by YouGov on behalf of Aviva. YouGov surveyed more than 1,200 UK senior business leaders from small, mid-market and corporate businesses (as defined by their annual revenue), from nine industries: Professional & business services; manufacturing & industry; construction & real estate; arts, entertainment & leisure; technology & electronic; retail & wholesale; motor trade; charities; and the public sector. Fieldwork was conducted between 31st August – 5th October 2022
2. This content, written in association with Aviva, was originally published by Insurance Age and shared via Insurance Post.
