Business growth and risk: why regular insurance reviews matter
As a business grows and evolves, its risk profile can change with it. For brokers, understanding what’s changed in a client’s business can be an important part of ensuring their insurance arrangements continue to reflect how the business operates today.
A new service, additional contractors or subcontractors, investment in property and equipment, or a change in the way a business operates can introduce different considerations.
These were among the themes raised by brokers during Q Academy: QBE Commercial Packages Insights, where the discussion covered QBE’s Commercial Packages appetite and practical questions around the risks brokers are seeing in their portfolios.
QBE Business Packages can bring together cover for a range of business risks, including property damage, business interruption, theft, liability and other selected risks, subject to the cover selected and applicable policy terms, conditions, limits and exclusions.
For brokers, regular conversations provide an opportunity to understand whether a client’s circumstances have changed and what those changes could mean from a risk and insurance perspective.
Business growth can change the risk conversation
Growth can take many forms. A business might employ more people, work with more contractors, expand into a new area, invest in equipment or take on different types of work.
Not every change will necessarily require an adjustment to cover, but understanding what has changed can help brokers build a more current picture of the client’s operations.
QBE notes that every business is different and that the industry a business operates in, along with the products and services it provides, can influence its insurance needs. QBE also highlights the role brokers can play in understanding a client’s risk and designing an appropriate insurance package.
That makes the regular review more than an administrative exercise. It can be an opportunity to revisit the fundamentals of the business and identify where further discussion may be worthwhile.
1. Has the way the business uses contractors changed?
Contractors and subcontractors generated several questions during the QAcademy session.
One broker asked specifically about payments to contractors in the real estate sector, followed by a question about whether this should include payments to contractors carrying out work on rental properties, such as end-of-lease repairs and cleaning. Another asked about QBE’s approach to liability where an insured uses contractors or subcontractors.
These questions highlight an important area for brokers to explore.
A client’s contractor arrangements may change as the business grows. Understanding who is performing work, what work they are carrying out and how those arrangements fit within the client’s broader operations can help provide a clearer picture when presenting the risk.
For brokers to consider: Has the client’s reliance on contractors or subcontractors changed since their last insurance review, and is the information held about those arrangements still current?
2. Has the nature of the client’s work changed?
Growth is not always about getting bigger. Sometimes it’s about doing something different.
A business might introduce a new product or service, take on different types of customers or expand the type of work it undertakes. Even where the business name and primary occupation remain unchanged, its day-to-day activities may have evolved.
The importance of occupation was also evident in the QAcademy Q&A. For example, one broker raised a question following discussion of road freight transport as a growth occupation.
For brokers, asking what’s different from 12 months ago can potentially reveal more than simply reconfirming the client’s existing occupation.
For brokers to consider: Are the client’s current activities still accurately reflected in the information provided to the insurer?
3. Have the client’s property and assets changed?
Business growth may also mean new equipment, additional stock, changed premises or investment in other physical assets.
QBE Business Packages can include cover for areas including damage at a business location, theft of property or money, specified property, business interruption, and machinery or electronic equipment breakdown, depending on the covers selected.
That makes changes to a business’s physical operations another useful area to explore during a review. It’s also an opportunity to discuss the adequacy of the client’s Buildings and Contents sums insured, particularly where assets have been added, upgraded or replaced.
Reviewing sums insured regularly can help identify whether they continue to reflect current replacement costs and the client’s circumstances. If sums insured are not adequate, underinsurance can have a significant impact on claim outcomes.
Rather than simply confirming historic figures, a discussion about what’s physically changed in the business, and whether the sums insured remain appropriate can help brokers understand whether the information previously provided still reflects the client’s current circumstances.
For brokers to consider: What has the client bought, sold, moved, upgraded or changed since the previous review?
4. Has business growth changed the client’s liability exposures?
As operations evolve, liability considerations may also warrant another look.
QBE’s Business Packages can include public liability cover against third-party personal injury and property damage, with available limits of $5 million, $10 million, $20 million or $50 million, subject to the policy terms, conditions and exclusions.
The questions raised in the QAcademy session around contractors and subcontractors demonstrate some of the practical complexity that brokers may encounter when discussing liability exposures with clients.
Factors such as who the business interacts with, the activities being performed and the involvement of third parties may all form part of understanding the client’s risk.
For brokers to consider: Have new activities, relationships or ways of working changed the liability considerations that should be discussed with the client and insurer?
5. Does the insurance structure still reflect the business?
One of the broader questions raised during the QAcademy session concerned co-insurance and whether there can be benefits in having different risks covered in different ways.
The question highlights a broader point for brokers: as businesses change, it can be worth revisiting not only individual sums insured and risk information, but also how the client’s insurance program is structured.
The appropriate approach will depend on the individual client’s circumstances, which is where a broker’s understanding of both the business and available insurance options remains important.
For brokers to consider: Does the client’s current insurance structure still align with the way the business operates today?
Keeping the conversation current
Businesses rarely stand still. For brokers, keeping pace with that change starts with understanding what’s happening beyond the information already held on file.
The questions raised during Q Academy: QBE Commercial Packages Insights show the breadth of considerations that can come into play, from contractors and subcontractors to occupations, underwriting appetite and insurance structure.
Regular reviews can provide an opportunity to identify what’s changed, seek further information where appropriate and discuss those changes with the insurer. In doing so, brokers can help keep the insurance conversation connected to the way their clients actually operate.
QBE’s Business Packages provide a range of cover options for small and medium-sized businesses, subject to eligibility, underwriting requirements and applicable policy terms, conditions, limits and exclusions. Learn more about QBE Business Packages.