Rising Insurance Costs!

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Gerard Finnan (Sherborne)

Insurance costs are all part of this collective increase and an area though small in overall cost, that you can do something about.  If you haven’t had an alternative like for like quote from another insurer in the last three years, read on!

One on my clients was recently in this category and faced with creeping premiums over time as a loyal customer, they decided to shop around.  They ended up reducing the existing annual premium by 50% or £8k.  This was a like for like quote. In fact, the new insurer went through the valuations and terms and conditions thoroughly and the client feels that they have enhanced their cover in some areas of the policy.

With rebuild costs and livestock and machinery values increasing, it will automatically cost more to insure, premiums are based on perceived risk by the insurer.  Here are some things that can be done to reduce your policy premiums.

  • Shop around like for like at least once every three years.
  • Have a Health and Safety audit done on your business.  Apart from having a duty of care to family and your employees, it will show to the insurer that you are trying to reduce the occurrence of accidents.
  • Benchmark costs vs other like for like farmers.
  • Opt for a higher excess.  If you can afford to pay more, the more of the risk you take the lower the premia.
  • Regular employee training to use machinery and equipment safely and efficiently.
  • Ensuring buildings are well maintained.
  • Install security cameras on your farm.  These are relatively cheap nowadays and have other management uses also.  Security tag the most vulnerable items to theft on your farm.
  • Think before claiming.  What affect will a claim have on future premia?

This list is not finite.  Some of the suggestions involve spending money which are more one off investments which will save annual premia and also reduce the hassle of sorting out prevented claims. 

Insurances are a cost that needs to be managed like any other cost.  It depends on your attitude to risk, which is linked to level of cover, how often you claim and how often you shop around.  I am not advocating changing insurer necessarily.  There is no point going for the cheapest premium and ending up not getting paid out or not getting the desired service level.

Insurance is needed the most when you can least afford it as it is covering risk which you might not be able to afford to reinstate.  When you can afford insurance is the time to reduce cover as the business can cope and cover some of the risk!

To review and benchmark your business costs independently, contact Gerard at gerardfinnan@fcgagric.com or your local FCG Office.  If you cannot measure it you cannot manage it!

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