Not really!
There are many aspects to consider when selecting an insurance company, particularly if you’re a small business. Above all, it comes down to service – will they answer your queries in an intelligble manner and will they make a fuss when it comes to making a claim. Service as you would know, is not really dependent upon size. Indeed, you might argue, the bigger companies tend to have poorer service – giving their ‘more valued’ customers a great deal more attention than the ‘little guy’. So what can you look out for? Here’s a few tips:
- It probably starts with your insurance broker. Does you broker charge you a fee for service or do they rely upon the insurer’s commission (generally 20% of your premium!). If they’re charging you a fee then they probably have little or not bias towards any particular insurance company.
- How does your broker treat you? Is it merely a phone call once a year to tell you that your renewal is comming up? Chances are that if they are a larger broking house they will probably have varying levels of service depending on the size of client – sound familiar? If your broker provides a bare minimum level of service then don’t expect the insurance company to give much more..
- Is your insurance company a specialist or a generalist? If they specialise in a particular product, say motor insurance for example, then it is likely that they also have more resources dedicated to managing that product – for example more claims assessors. It is also likely that they simply have more to work with – meaning that a rate changes are likely to be less (on average) for a larger premium pool. Check out AAMI for example who claim that they have over 2.5 million customers in Australia. As you may know, AAMI specialises in Motor and Home & Contents. Accordingly, APRA records show that they collected some $1.7 billion in premiums during the 2009 financial year. The records also reveal that they spent some $370 million in ‘underwriting expenses’ so its probably no surprise that they have over 40 branches and customer service centres and a huge advertising budget. Still, it’s a fairly safe bet that you will be able to get help from someone at AAMI should you need it.
- Does your insurance company have enough in the kitty to make sure your claim get’s paid? Given the prudential authorities stringent capital requirements for licensed insurance companies, it is highly likely that your claim will get paid – if the insurance company doesn’t deny it that is! Again, we can refer to APRA statistics. CGU for example, collected $1.9 billion in premium during the 2009 financial year but paid out $1.5 billion dollars in claims. The question is then, how big are their reserves? Well, according to the recent IAG investor presentation $8 billion.
- Has your insurance company won any awards for service lately? You can always check Cannex and get the inside scoop – unfortunately however, it’s a little more difficult in terms of small business insurance – there just isn’t any.
Of course, in the end the best information is perhaps word-of-mouth, from a friend, colleague or even local competitor. What have you’re experiences been? We’d love for you to share some.
