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In its simplest terms, reinsurance is insurance for insurance companies. Unfortunately, global reinsurance is impacting businesses of all sizes following an increase in catastrophic events across Australia.
Insurers paid out $36.5 billion in claims in 2022 alone, according to the Insurance Council of Australia. There were more than 300,000 disaster-related claims lodged from four declared insurance events across the country, costing more than $7 billion in insured losses. There has also been an increase in costs for repairing properties coupled with rising claims costs and inflation.
Now the cost of reinsurance is climbing too. The rising costs have even seen some global reinsurance pull out of covering some insurers’ environmental risks. It means some insurers have taken on the risk themselves instead of paying higher reinsurance costs. So how can rising reinsurance have an impact on your business?
What can rising reinsurance mean for your business?
Here are some likely effects of the global reinsurance landscape on your business.
As reinsurance becomes more expensive and difficult to get, insurers may have to increase premiums for their policies. Unfortunately, many businesses may face increased premiums as a result.
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Insurers can ask for more information about a business’ risks and plans during renewal and when a claim is lodged. You may be asked more questions and spend more time reviewing the coverage they will offer. These questions and requirements may feel daunting when you’re time-poor, but you still want to ensure you have the right cover without breaking the bank.
Insurers may impose coverage restrictions or even larger exclusions. Some insurers may even decline to reinsure a business if they feel the risks are too great in this present climate. These impacts may make it more difficult to decide how and who insures them and the cost of ensuring they’re properly covered if a disaster strikes.
How can you make sure you have the right insurance cover?
An insurance broker can provide expert advice and ensure you get the right cover for your business needs. Experienced brokers have strong relationships with various insurers and can help businesses get the right cover at the right price. Their advice means you don’t have to guess what will work with you and hope for the best.
Brokers can also help review a business’ existing policies and procedures and suggest ways to potentially reduce your insurance costs. This could include adjusting a business’ claims excess or suggesting ways to reduce risk, which insurers can look at more favourably.
If you have to make a claim, brokers can also help you with the claims process, which can be difficult to navigate. This help is especially important following a major disaster when insurers are inundated with claims and outcomes may take longer. A disaster can be one of the most stressful events you go through as a business owner and a good broker can help ease that.
Reducing your insurance costs can be tempting but it’s a trap you should avoid.
Speak with us today
Reducing your insurance costs with rising costs can be tempting, but it’s a trap you should avoid. It’s a more important time than ever to focus on the right protection. Speak with us today about your needs and whether you have the right cover.