We are now entering the depths of winter in the Northern Hemisphere at a time when the world is experiencing diverse and more extreme weather patterns. Marine businesses are frequently suffering damage from what used to be the 1 in 25 year storm often now occurring several times in one winter. This can range from a roof being taken off of a building, wave impact damaging quays and equipment on the waterfront to customer’s vessels being blown over.
The costs of labour, materials and legal fees are outpacing income in the marine industry during what has been an extended period of financial uncertainty in the world economy. The United Kingdom’s future with the European Union is in question and the effect that this will have on the economies of both sides is still unknown. Is this a time to cut corners and costs where you do not immediately see benefit being added to your business? You might very well decide that it is.
One cost to think long and hard about before you begin cutting is that of your insurance premium. When you have not made a serious claim for many years and your business is well established there is a clear temptation to do so. Insurance can be a large cost to your bottom line. However, as with any product or service you buy, you tend to get exactly what you pay for. Unlike other costs to your business, marine insurance premiums have been falling for at least a decade and many insurance brokers and insurers have reduced service levels and cut expense ratios as their incomes have declined.
Insurance is an unusual beast in that it is a product that we pay for but hope we never have to use in earnest. If we ever do have to, we want it to be there for us and to perform as we hope and expect. It will quite possibly be the difference between a business continuing or disappearing when serious damage or a serious injury occurs and many former business owners can attest to this.
It is therefore important that you cut insurance costs with your eyes open rather than be lured into the perceived safety of large premium reductions, under valuing your property or not buying business interruption insurance. You don’t want to find that bad weather removes your roof, your quays or a customer’s vessel only to receive a poor level of service, partial payment or be told you have no cover when you need it most.
Choosing your insurance broker carefully is vital, you may have known your broker and insurer for years, they may be very personable and saved you money while always delivering your policy on time but that is only a part of the story. How well do they really know your business, are they experienced, do they specialise in marine business and do you know how well they will respond when you really need it? If not, do find out as it is important not only to understand the numbers on your premium invoice but also exactly how and when the service you hope never to have to use will be delivered if the worst were to happen.
As an established Marine Brokerage with 40 years’ experience we are surprised by the changing attitude in the distribution of insurance policies for marine businesses. There is appears to be a belief that these needs have been met by arranging a lower premium every year, offering universal products, rather than providing a cost effective assessment of how a client should be protected should the worst happen.
It is important that both broker and indeed underwriter take the time to understand the true nature of a client’s risk and to fairly price the cover accordingly. This can be achieved in a number of ways but, the good old fashioned but effective way is to meet the client on site, walk around the business, review specific concerns and to take his questions on policy coverage & claims service. A working relationship is then established early on.
So, as we begin to enter the depths of winter and the storms start to rage, take the time to take stock of your business, assess what you need to protect and ask your broker how best to protect it. Take his advice and ask him questions. Please always remember that, as in most walks of life, you often get exactly what you pay for so check the quality before you buy.
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