“If you arrive tomorrow morning and it was a pile of rubble, what would you do as a business?”
In the latest episode of The Business Compass Podcast, Richard Coulthard sat down with Wayne Cowley, an expert who bridges two worlds—insurance and the Police. As Shareholder and Director at Packetts Insurance and a background in the West Yorkshire Police, Wayne offers a unique dual perspective on the challenges businesses face when securing coverage. In this blog, we dive into the actionable advice and valuable insights shared during their conversation, giving business owners and property buyers the tools they need to make informed decisions.
Understanding the Insurance Market: Brokers, Insurers, and Reinsurers
Brokers: Act as intermediaries between clients and insurers, advising on risk management and finding the best coverage options.
Insurers: Assess risk portfolios and provide coverage based on their capacity to handle potential claims.
Reinsurers: Offer additional layers of protection to insurers, allowing them to manage larger risks and maintain financial stability.
Market Dynamics and Insurance Pricing
Insurance rates are influenced by various market dynamics, including the availability of reinsurance and the overall risk environment. For instance, if an insurer decides to limit its exposure to a particular type of risk, it can lead to increased rates across the board as market capacity shrinks. This can be particularly challenging for businesses in high-risk areas, such as those prone to flooding.
Challenges in High-Risk Areas: Flood Insurance and Risk Mitigation
One of the significant challenges discussed is obtaining insurance in areas prone to flooding. Wayne emphasises the importance of proactive measures:
- Consult Insurers Before Committing: Potential property buyers or lessees should consult with insurers to check the availability of flood insurance before making any commitments.
- Understand Local Flood Protections: Familiarise yourself with the measures taken by environmental departments to mitigate flood risks, such as flood barriers and water diversion systems.
- Work with Knowledgeable Brokers: Engage with brokers who understand the nuances of the market and can navigate the complexities of obtaining coverage in high-risk areas.
Adopting a Risk Management Mindset
Document a Disaster Recovery Plan: A well-documented recovery plan serves as a guide during crises and demonstrates preparedness to insurers, potentially leading to more favourable coverage terms.
Consider Hidden Costs: Beyond physical damage, consider loss of income, business interruption, and other hidden costs associated with disasters.
Regular Property Valuations
Accurate property valuations are crucial to avoid underinsurance. Wayne recounts a case where a client faced a storm damage claim but had not updated their property valuation in years, leading to a denied claim due to significant underinsurance. Regular valuations ensure that properties are insured for their reinstatement value rather than their market value, preventing such issues.
By understanding the nuances of insurance policies, adopting a proactive risk management mindset, and engaging with knowledgeable brokers, businesses can better protect themselves and ensure their long-term viability.
Listen to the podcast episode here.
To find out more about Packetts Insurance visit https://packetts.com/