A bit of humour…..
“Ask John to perform his version of Search and Destroy on your premiums” (Iggy)
“All the advice, all the savings, all the advice” (Donald)
“Reassuringly expensive” (one of John’s clients for over 20 years)
Joking aside, we’re deadly serious about reducing your premiums……
significantly, safely and strategically….
Reducing Premiums Significantly is Easy!
- Yes, it is, and we see it often!
- Simples – just increase your excesses and/or stop buying some policies (eg Personal Accident), because “you never claim on them”
- Alternatively, buy from the cheapest provider and rely on FSCS compensation in the event of insurer failure (if you qualify at all!)
Reducing Premiums Significantly and Safely is Harder!
- However it is dressed up, increasing excesses and/or not buying policies means increased risk-taking for you (and your claimants)
- You must understand
- What could go wrong (Expected Maximum Losses) and how you would now finance them
- That claims will now cost you more than before (higher XS) which may impact cash-flow forecasts/your Treasury management
- Your cash position will be rosier than before (lower upfront cash outgo), but this is illusory: high value injury claims take 10+ years to be paid
- That your claimants may never get paid (if you have not reserved appropriately, with suitable claimant security arrangements)
Reducing Premiums Significantly and Safely and Strategically is Harder Still!
- However it is dressed up, increasing excesses and/or not buying policies means a change in your insurance strategy
- You must understand
- The financial consequences (potentially increased balance sheet volatility, higher value claims to manage and pay)
- The cultural consequences (insurance is now being used as a last resort, rather than a day-to-day “cash machine”)
- Insurance asset quality monitoring (insurance receivables will become less common, giving you less visibility as to insurer solvency/survival)
- Investor communication (potentially increased balance sheet volatility, some risks may be uninsured compared to investor expectations)
- Accounting issues (provisions cannot be held for future claims, but net assets can be hypothetically ring-fenced to ensure availability)