29 Sep Chelmsford-based insurance broker Ascend Broking establishes a new arm to its business
Chelmsford-based insurance broker, Ascend Broking, has established a new arm to its award-winning business, as it endeavours to help clients of a certain size, in Essex, London and beyond, consider a new way of insuring their risks.
Self-Insurance Protect (www.selfinsuranceprotect.co,uk) will work primarily with larger businesses, which have the financial capital that makes it possible for them to consider taking on some of their own insurance and claims administration, rather than buying an insurance premium to cover all risks.
Fundamentally, this approach – already adopted by a variety of UK businesses operating large fleets, liability and property portfolios – requires the business to review and analyse its claims history, assess the risk retention levels on their balance sheet and build a long-term alternative to traditional insurance. The funds created would aim to cover predicted claims and some unpredicted losses.
In many cases, businesses who turn to self-insurance will take a smaller back-up policy with an insurer, which can be drawn upon, if necessary, if claims exceed a certain amount. In the case of motor fleet, the self-insured pot will typically cover damage and write-offs of owned vehicles and smaller third-party losses, whilst the insured segment of the risk will cover any large third-party liability claims that could not have been predicted.
The advantages of such a means of insuring risks have become more attractive to UK businesses, as the rate of Insurance Premium Tax has increased. Now standing at 12% – one of the highest rates in Europe – this cost can be either avoided or heavily reduced, the more self-insurance takes place.
The cost of insurer administration is also reduced and there is no need for a company to pay upfront costs for insurance that might not be used, if claims are low or the risk is very specialist and is ony a catastrophe cover. The solution, therefore, provides an improvement to cash flow, as, once money is set aside, losses are paid for on an as-you-go basis.
Self-insurance also enables a business to take better control of their claims and repair costs, with the aim being to settle claims swiftly.
Add to this the fact that such a means of insuring risks typically leads a company to engage in better risk management and control, so as to keep as much money in their fighting fund as possible, and their can be clear benefits. Companies can also immediately enjoy any financial fruits accruable from such risk management strategies, rather than waiting for an insurer to eventually reduce their premiums.
However, this type of insurance is not right for everyone, which is why the Selfinsuranceprotect.co.uk team is offering individual, virtual consultations, to talk potential clients through the options and explain the implications. One pitfall of self-insurance could be that of not setting aside enough money to cover losses, but with the team’s help, such instances should be minimised.
Speaking about the new division, Ascend Broking’s managing director, Matthew Collins, says: “Self-insurance is about long-term planning and improving risk controls within the business. We will carefully help clients consider their options on purchasing large insurance programmes and improve the way risk is managed in-house. It is a possible cost-saving strategy and particularly attractive at this time for businesses that have the cash to put aside and who want to aim for tangible savings on their insurance costs.
“This type of insurance is available to all sectors. We are geared up to talk to businesses from across the business spectrum, who are interested to know whether self-insurance could be right for them and to help them analyse their claims histories, to be able to come to an informed decision.
“The coronavirus outbreak has, without a doubt, affected all businesses. Similarly, the insurance market is being dramatically affected by the same forces. As events continue to unfold around the world, we are seeing strong signs that the insurance market is rapidly hardening. This means insurers’ appetite for risk is changing and pricing is increasing. Insurers are being more selective on the risks they underwrite, the limits they are prepared to offer and the pricing mechanics they use. This is leading to insurer withdrawal from some markets, insurers declining to offer terms in some parts of the country, restrictions or a withdrawal of cover for certain types of trade or industry sector, restrictions on policy cover, terms and conditions and increased excesses. Premiums are rising significantly in some cases, as insurers limit their overall exposures. Amidst this scenario, Self Insurance Protect can provide an alternative approach to traditional insurance in what is a rapidly contracting market.”