We thought we’d put this simple 5-point guide to insurance for business covering the following aspects for your convenience:

1. Why insure

2. What to insure

3. When to insure

4. How to get insurance

5. Types of insurance

So lets make a start then! Please click on one of the above topics.

The latest report on the insurance industry by PricewaterhouseCoopers Australia reveals that Australian insurers are still doing quite well despite a string of recent catastrophes.

At the same time however, industry analysts are reporting that premium rates will increase over the coming months as insurers attempt to recover from poor investment results suffered recently.

With businesses in Australia still recovering from the aftershocks of the GFC, it’s disheartening to see premium increases at a time where some of Australia’s biggest insurance companies such as QBE, Suncorp and Allianz are making hundreds of millions of dollars in net profits after tax. According to the PWC report for example, QBE made $1.97 billion dollars in after tax profit whilst Suncorp made $394 million.

This comes as no surprise given our earlier article on premium increases for businesses during June. Of course, we need not expect much from insurers as the customer is generally a lower priority.

With so much of the Australian insurance market ‘stitched up’ between the top 3 insurers – QBE, Suncorp and IAG and little room for industry consolidation, insurers are looking to invest their money in acquisitions abroad rather than in developing new products or enhancing service for customers.

If you’re a business, getting a quote directly from an insurance company can be difficult. Unless it’s NRMA or a Suncorp brand (i.e. GIO or AAMI), chances are that you won’t get very far without a broker (incidentally, NRMA offer the same product as CGU).

The problem is a historical one with brokers traditionally representing the interests of their clients to numerous insurers in a bid to get the ‘best cover at the best price’. The argument goes that brokers offer the distribution base through which to pursue a larger target market. Of course, this outsourced distribution comes at a cost to the customer through broker commissions (generally around 20% of the premium for business insurance). But as insurance companies and brokers have gotten bigger and bigger this cozy relationship seems to have forgotten one thing – the customer!

In a bid to compete against other brokers or insurers, policy enhancements have resulted in highly homogenous products. Enter a little thing called ‘the internet’. With the benefit of over 10 years of experience in other countries such as the UK and US, industry insiders believe that new, online insurance quote systems could potentially see an end to broking as we know it. There is a firm belief that online comparison tools or ‘aggregators’ as they are called will become the new insurance brokers and ultimately benefit those insurance companies that do deal direct with the public.

These tools not only offer greater transparency over price, but also the immediacy of service that just cannot be rivaled by brokers. Have you ever woken up in the middle of the night and remembered that you need to buy insurance?? Hopefully you haven’t but if you did, wouldn’t it be nice to get an insurance quote online when you want it?

To our mind, it makes sense to give customers another avenue through which to purchase business insurance – hopefully with zero commissions! Technology should make our lives easier and the ability to access readily available information on how best to protect our businesses can only be a good thing – after all, we are really just paying a broker for the market knowledge and insurance contacts that they have. The problem however, is that this has also become commoditised with brokers ultimately only accessing the same policy terms and conditions as their own competitors (but some achieving higher commissions!).

Of course, technology such as the internet offers a much wider audience for insurance companies and no doubt, lower costs – however don’t hold your breath for lower premiums!