First of all, if you are heading away to a lovely destination – I am very envious!!
There are many things to consider before you head away for a holiday to ensure that you have a well deserved, relaxing, stress-free break.
Some of these are:
- Don’t update your social network with holiday snaps until you return. Likewise, no need to announce that you’re going away online anywhere.
- Securing your home – lock all access ways into your home (windows and doors) and ensure that your curtains are drawn
- Ask a trusted neighbour (or two) if they can keep an eye on your home and collect any newspapers or other items that may be delivered during this time
- Consider arranging a house sitter
- Redirect mail – did you know that you can arrange for the Post Office to hold your mail while you are away?
- Mow your lawn prior to leaving. If you are likely to be away for an extended period perhaps arrange for someone to do it whilst you are away to keep up the appearance of a “lived in home”
- Arrange for your lights and TV/radio to come on with a sensor or automatic timer
- Turn off the water mains to the house if nobody will be staying – a common insurance claim is a burst or leaking pipe and no-one wants to return from holidays with their house resembling a swimming pool!
- If you are going away during cyclone, storm or bushfire season turn off your gas and power and lock away or tie any loose items
- Turn off all electrical devices. If possible, it is also a good idea to unplug the item
- Secure any valuable items in a secure or hidden location. This would also include the precious memories you have stored on your laptop or hard drive
- Photograph your travel documents – passport, itinerary etc. Consider sending a copy to a relative
- Photograph your suitcase contents, particularly if there are valuable item/s within it – this will assist in the event of a claim
- Obtain travel insurance, check the exclusions and conditions. Are you hiring a scooter, skiing or have pre-existing medical conditions? These are some of the common things that are excluded or limited
- Register with Smartraveller and check the potential issues in the country that you are travelling
Have an amazing holiday!!
Why are we paying higher premiums?
This is a question that I have been asked many times since moving to Broome. There are a few reasons why the North West is paying more, the main being the inclement weather and lack of Insurers willing to compete in this space.
Currently we have three main Insurers that will look at a property risk above the 26th parallel and those Insurers base their rating structure (mainly) on the following factors:
- Type of risk (occupation/business)
- Construction of risk
- Previous claims history of owner
- Loss history for the area
- Reinsurance costs
What you may not be aware of, is that the Insurers have a backing agent called a Reinsurer. Essentially, the Reinsurer is the insurance companies “insurance company”.
The Reinsurer provides capital to the Insurer and once they have exceeded the claims costs that they have agreed on with the Reinsurer, the Reinsurer will pay the Insurer the remainder. For example, if an Insurer has a maximum limit payable of $2,000,000 on properties in Hay St and a claim occurs for $5,000,000 the Reinsurer(s) will pay the remainder of claims costs to the Insurer.
The Reinsurer does not see Australia in states or areas but as “below and above the 26th parallel” (The 26th parallel south latitude is a circle of latitude that is 26 degrees south of the Earth’s equatorial plane). This means that any claims in the North West – think of the recent claims in Queensland and the East Coast from cyclone Debbie that are likely to cost $2b – affect all towns above the 26th parallel.
The Reinsurer provides a cost to the insurance company who in turn passes on some of this cost to the Insured.
Overall rate increases
Along with ongoing losses incurred by the Insurer this means that rates across the board are increasing (not just in the North West) but as we have incurred the highest percentage of losses to the Insurers; the premiums for the North West have increased comparatively more than the rest of Australia.
We have noted that this year the renewal cycle has started to turn and all property risks have been increasing and this is a trend that is likely to continue until the Insurers have been able to recover some of their losses and return their portfolios back to a profitable and sustainable level.
Ensuring you’re fully covered
Part of my role as a broker and client advocate is ensuring that my clients are not disadvantaged. We are continually in negotiations with Insurers to push them to understand the specific risks in Broome and surrounds and to determine a rating structure that is aligned with the actual risks that these areas face.
Whilst costs are very important to your balance sheet, I would like to impart this last thought – would you prefer to be covered adequately or pay the cheapest premium?
I have many people come to me in a time of great stress when they are fighting to get a claim paid out because they bought a policy online or went for the cheaper option without understanding the risks they actually needed covered. My preference is to discuss all the options with you and advise the relevant cover for your business and then you can decide with an educated mind what is best for you and your business.
This is a question that I am asked often as an insurance broker, along with “what do you do?” People wonder, are brokers just there to get the Insurer’s commission regardless of the client’s needs?
My answer to this is simple – as a professional broker I am here to serve my clients, I want to understand every aspect of your business and develop a program that fits your needs and budget. Above all, I want to make sure that my clients are comfortable with the cover they have taken, the risks that they are willing to take on themselves and to ensure that the overall process is as simple as possible.
It’s all about trust and assurance
At the end of the day, you only receive a piece of paper. You have to trust my ability as a broker to determine that a particular policy will fit your needs and ensure you are not left exposed in the event of claim. One of my main roles is to ensure that if an unfortunate incident occurs that your claims process is as smooth as possible and you are back to the same position prior to the loss.
Our main role as brokers is to be an advocate for our clients and deal with all the technical aspects of insurance so that our clients can get on with running their businesses safe in the knowledge that their insurance needs are covered.
Insurance is complex so a broker ensures you’re properly covered
Insurance can be complex – with endorsements, conditions and exclusions that unless you are aware of all the differences and products that are available in the market you can get caught out quite easily and take out a policy that does not meet your needs. The end result of this could be that in the event of a claim, your claims are declined and you have paid out premiums for nothing.
I look at it in the same way as my taxes – I can do them myself online but I would prefer to involve a tax professional to do them for me. This ensures I haven’t missed anything and I know that I can ask them questions about the process and they have my best interests at heart and will make sure I receive the maximum return based on my individual circumstances.
The difference between brokers and agents
There is a difference between brokers and agents as follows:
Brokers work for the clients and are not employed directly by any one Insurer. Our job is to ensure that the client receives the best cover at an affordable price regardless of Insurer chosen. We also determine if the Insurer is reputable and the likelihood of claims being paid.
Agents work directly for one Insurer; they will not approach any other Insurer for quotations and it is questionable if your policy will be tailored to your specific needs. For example Elders is owned and underwritten solely by QBE and Wesfarmers is owned and underwritten solely by IAG (CGU).
Adam Ware is Partner & Branch Manager at BJS Insurance Brokers in Victoria. Adam specialises in holiday rental insurance (landlord insurance) and founded https://www.holidayrentalsinsurance.com.au. He was recognised for the Warren Tickle Memorial Award, and as NIBA Young Professional Broker of the Year in 2017, as well as Insurance Business Australia Young Gun of the Year 2018.
Advisr spoke to Adam about his experience as a successful young insurance broker, his tips for brokers starting out, and where he sees the industry going.
What is it about insurance broking that makes you get out of bed every morning ready to go to work?
If you enjoy what you do then getting out of bed and heading off to work is the easiest part of the day. Our industry is so diverse and forever evolving which creates plenty of opportunities for brokers to evolve their own businesses as the world changes. We are lucky to work in an industry that unfortunately does not get the recognition it deserves for the results that are achieved. For all the negative comments you hear about Insurance, the facts are that a huge number of businesses, personal assets and infrastructure continue to exist today from the work completed by insurers and brokers alike.
Is there a difference in how the ‘young guns’ work compared with the ‘old guard’?
Yes, I’ve witnessed quite a few differences having worked both with the younger and older generations in my career to date. There is an endless amount that younger brokers can learn from their experienced counterparts. Young Brokers have these incredible resources at their disposal which allows them to learn from almost anywhere, about anything and everything. Also as a result of the technology revolution in the past decade, young people in general are incredibly adaptable, which is a huge advantage for these individuals entering the industry. The younger generation have a great ability to come up with new ideas on how to complete a variety of tasks. Some of the procedures BJS have implemented recently were developed by our youngest staff members. They provide a fresh set of eyes on potentially outdated processes and can often identify an alternative that could save time, money or increase productivity.
Alternatively, there is one trait often associated with more experienced brokers where I believe young brokers should place a sharp focus. The skill of being able to handle an emotional and/or difficult situation in a calm and mature manner, by listening to understand as opposed to listening to react. This has been a major focus of mine for a number of years. It is not an easy skill to implement at first, especially at times when emotions can be running high from multiple parties and even more so if you believe you are “right”, however you quickly learn that YOU can be the difference in either solving the problem, or escalating the problem further, simply by the way you listen, understand and the manner in which you respond. When dealing with a wide variety of people across the industry each day, including broking, underwriting, claims, etc, younger people can be emotionally charged. That is certainly not every young person and likewise not every experienced broker has their emotions in control either, however this is a trait I have seen regularly among successful experienced brokers and feel is vitally important for Young Brokers to learn and implement if they intend to have long term business relationships and ultimately career success.
What advice would you give to young brokers starting out in the industry?
Master the discipline of being able to complete the tasks required of your position without becoming distracted by external sources. At present, the world is constantly trying to get our attention all the time via Social media, “fake news,” politics, spam emails we never subscribed to. Ignore them. These things will be there after work.
What do you think is the secret to your success as a young insurance broker?
I had fantastic mentors at the start of my career. I truly believe anybody who receives mentoring similar to the quality I received, would have a sound foundation for long term career success. In addition I have always been willing to attempt anything. I really enjoy researching potential new ventures and trying new methods of broking. I was extremely fortunate to have the backing of the BJS Board when exploring new ventures as they followed me through with these new ideas on the basis that even if an idea “failed” it would be a great learning experienced. There were a few ideas that did not work, some had moderate success however one of these ideas became the biggest Insurance program within our Branch, making it all worthwhile.
Clients now seem to use email as their main method of initiating contact with us. Personal meetings and calls are still very frequent, but many clients initiate the contact via an email to our office first.
How has the way you communicate with clients changed over the years?
Since beginning with BJS in 2008, where email was practically an internal communication method only, clients now seem to use this as their main method of initiating contact with us. Personal meetings and calls are still very frequent, but many clients initiate the contact via an email to our office first.
This transition, along with streamlining some internal processes within our office has also helped us keep our operating model profitable. For example: 3 years ago we decided that we would make a conscious effort to contact every client asking them if they would be happy to receive email correspondence going forward. At the time we probably emailed 25 – 30% of our clients and hard copy went to the other 70 – 75%. Today email is roughly 95% of correspondence and our combined postage, printer and ink costs are down almost tens of thousands of dollars.
Having said that, I find it hard to foresee a technology that could replace the person to person relationship that only a broker can develop with their client.
We must adapt to the changing service environment. When you’re adaptable, you’re often willing to consider the best approach for each particular client situation. Therefore if we do not launch ourselves into these new areas and adapt to meet our clients future needs, our clients will eventually not need us.
The single greatest asset that many of us will own is our home, but how much thought has been placed into the current values? Are you adequately insured and will you be able to rebuild your property to the same standard as it was previously if the worst happened?
Some of the costs that need to be considered are:
- Local building codes and regulations—have they been updated, do you need to add additional fire measures to your property, will you need to change the building materials?
- The current replacement cost of your property (excluding land), taking into account any escalation in costs that may occur due to a catastrophe. Builders tend to increase their labour rates when a catastrophe occurs and the cost of building materials also escalates due to the number of properties that need rebuilding which puts pressure on the manufacturers and the ability to source materials.
Some policies do include an “escalation clause” to cover some of these costs
- The cost to remove all the debris from the site and re-level to start again. Consider any hazardous materials that are on site that will need specialist removal.
- Have you included sheds, outdoor structures, pools and outbuildings in your sum insured?
- The majority of policies have an underinsurance clause which determines how close you need to be to the correct replacement sum insured of your property. Generally this is between 10 and 20%, meaning that if you underinsure by more than this “buffer” you will be penalised in a claim. Please refer to your Product Disclosure Statement or Broker for more information on this.
Did you know that after the Blue Mountains fires many people were not able to rebuild their properties due to underinsurance? This was caused mainly by a change in council regulations which has left a number of insured people more than $200,000 out of pocket.
What should you do?
Check with your local council that the building regulations have not changed. Ask the council if you are in a flood or fire prone area.
Every 1-3 years:
Obtain a valuation on your property or at least speak to a builder about current rebuilding costs.
Some calculators that may assist:
The insurance market can at times, be a tough nut to crack, especially when it fluctuates from a soft insurance market to a hard one. When the hard market drops, we see insurers tighten underwriting criteria, coverages become more difficult to secure, premiums aren’t as easy to negotiate on and coverage when it isn’t expensive, can become completely unavailable.
Preparation is the key to success, and while you can prepare yourself for some rate increases in the next few years, it’s often better to take a more proactive approach.
The following three steps will help you minimize the impact of those stringent insurance rating criteria.
1 – Understand the Importance of an Insurance Broker during a hard market
Following advice will only get you so far if you don’t understand why you’re doing what you’re doing. Insurance brokers during a hard market will become your saving grace. Their role is to fight your battles and continuously source competitive services to suit your needs.
In a hard market, it can feel like an insurer is attempting to block your every step with their stringent standards, so having an insurance broker that understands the changes and is prepared to seek out the best result for your business, can ensure your policy will be tailored to your needs and remove the burden from your own shoulders.
This not only makes the process smoother but allows you to focus on your business and do the job you know how to do best, saving you time and frustration.
2 – Develop a good relationship with your insurance broker
Teamwork makes the dream work and a great relationship with your insurance broker will only result in the best outcomes for your business. An insurance broker can only work to the best of their ability if they understand what you want and are hoping to achieve. If either you or your broker aren’t on the same page, it might be best to try another book.
Make sure that your insurance broker understands the impact of the hard market on your business and that they understand your actual business, the industry and its potential risks. A hard insurance market brings new clients to brokers, so take advantage of the competitive arena and make sure your broker has proven their capability to you, above all the rest.
With the right broker and a trustworthy partnership, you will be guaranteed to receive the best price, coverage and policy to secure your business’ future.
3 – Prepare the business for increased insurance costs
“By failing to prepare, you are preparing to fail.” ― Benjamin Franklin
Being aware of the potential for increased insurance costs isn’t the same as actually preparing for the occasion. Insurers need to be proactive and commence their renewal process early to ensure the best outcomes. Present risks in the best light and allow adequate time to address any surprises or consider strategies which may mitigate premium increases, such as increased deductibles.
It can often become a shock when the market turns and many find themselves mentally unprepared for the sudden shift. Pre-emptive action is better than reaction, so prepare your business early.
It’s understandable to start sweating at the mention of insurance premiums on the rise, but there’s plenty to start considering, planning and actioning now to prepare your business for the worst. Taking an active and strategic approach to managing your company’s risks and insurance claims will minimize the impact of a hard insurance market, so it’s best to start sooner rather than later.
I offer a 30-minute business review session. During that session I provide my advice on if and how I can help you minimize the impact of a hard insurance market. To find out more email me at firstname.lastname@example.org or phone 0401 109 324.
The journey from passion to profitable online business
New technology means it’s never been easier to turn a passion into a fully-fledged online business, as Kelly Baker, Founder of The Beauty Insider can attest. We spoke to Kelly about taking the plunge and the steps she’s taken to protect herself along the way.
A few minutes scrolling through your Instagram feed or a quick search for ‘wellness’ online and you’ll find hundreds of blogger accounts offering tips and advice.
The truth is, it has never been easier to take a passion like fitness, wellbeing or beauty and turn it into a real, money-making business with millions of dedicated fans and followers. Free social media platforms and DIY websites mean it is achievable for anyone to establish an online presence – but just because your business is based in the cloud, doesn’t mean you can forget about having the right insurance in place.
Being an entrepreneur always comes with inherent risks, especially if your small business is your primary source of income. You need to be smart and make sure you’re protected. We spoke to Kelly Baker, Beauty Director and Founder of The Beauty Insider, to get some top tips for bloggers looking to keep themselves covered:
Protect your health (and your income). If you’re working for yourself, you don’t have the luxury of paid sick leave. A couple of weeks out of action could see you struggling for cash, so considering health insurance and income protection or total disability insurance will make sure you’re covered should anything go wrong. Kelly says, “I also have life insurance as I’ve got two little ones. Knowing they would be OK if anything happened to me is a load off my mind.”
Think about your liability. Operating on a public forum can win you fans and earn you critics. General liability insurance will make sure you’re protected against things like libel and copyright infringement.
“It might sound extreme,” says Kelly, “but there is always a risk that a client might take offence at something you produce and decide to take legal action. In that case, professional liability insurance will cover you.”
Whose data do you have? If your site stores user data like email addresses or fitness data, you need to make sure you treat it with care and have proper protection in place. Check that your insurance package will protect you if your site security is breached.
Consider what tools you need to keep your business going. If you’re running an online business, your phone, laptop or tablet are probably crucial to keeping your business up and running. Make sure your assets are protected in case of loss or theft so you can maintain a seamless online presence and keep your clients happy.
“I firmly believe my business will only go from strength to strength – but I’m smart enough to know that things can and do happen, and I want to be prepared,” says Kelly. “If I’m ever fretting over what I would do if things didn’t work out as planned, I remind myself of the insurance policies I’ve taken out and it sets my mind at ease.”
Finding the right insurance for a growing business can be confusing. Find the right insurance broker to help.
What is the difference between an insurance broker and an insurance agent?
What are Insurance Brokers
What are Insurance Agents
Checklist before going away on holiday
- Secure your house – make sure you lock the front door, back door and any access ways into your house.
- Put away your valuables – don’t leave jewellery or precious items out and about. If you have a safe, then it is worth putting your valuables that are not coming with you into a safe or somewhere else that you feel is secure.
- Mow the lawn – Keeping a house looking neat and tidy goes a long way to make it looked lived it. Imagine if your grass is looking a little long when you leave on holidays, can you imagine what it might look like when you return weeks later.
- Lock your windows – If you are leaving home in the summertime, then do a quick walk around the house to check and secure all your windows.
- Turn on your lights – Put your lights on a timer. Nowadays there are even options to control your lights from your smartphone, enabling you to add some random patterns into what light is turned on when to make the activity in your house look less predictable.
- Organise for packages or letters to be collected – an overflowing mailbox or packages that sit on a front porch and haven’t been collected for a few days are a clear signal that no one is home. Organise either for you mail and parcels to be held at the post office or collected periodically by a friendly neighbour.
- Remove your spare key – If you leave a spare key outside your house, just for emergencies, then now is the time to put it inside for the duration of your holiday.
- Unplug electrical devices – printers, kettles, toasters, washing machines and dryers are just some of the electrical devices you should unplug before going away. A good rule is that if an electrical device doesn’t need to remain plugged in, then unplug it.
- Photograph your important travel documents – your travel details, receipts for bookings and your passport are important documents and storing a digital copy can make life a lot easier if you lose them or need to access them.
- Close your curtains – Closing your curtains makes it harder for people to see into your house and be tempted by any of your items.
- Let a friend or neighbour know – If you can, it is good to let someone know so that you are going away, so they can keep an eye out for you on your property.
- Water your plants – a little water before you go can buy you some time with plants and hopefully enable them to last till you are back from your holiday.
- Check your travel insurance – If you don’t have any, then consider buying some.
- Lock the front door – worth saying this again as leaving the keys in the front door or leaving it unlocked can happen.
Going away on holidays is a great opportunity to have fun, create new memories and enjoy new experiences. To make it more enjoyable, a little preparation can enable you to relax.