Good governance and regular evaluation of business risks are essential to steer your business towards a secure and prosperous future.
Why is it important to understand your financial risks?
A good understanding of your operational and governance risks enables you to make informed decisions regarding whether to transfer risk to insurance to safeguard your organisation from financial losses. Potential risks that can impact your insurance cover may include new business activities, contracts, property damage, liability claims, or operational disruptions.
What protective role can insurance play for businesses?
Insurance acts as a risk transfer mechanism, providing financial protection against unforeseen events. However, simply having insurance is not enough; it must be specific to your needs, and you must consider insurance as one element of your overall approach to risk management and mitigation.
Risk management specialists can advise on the most appropriate risk mitigation strategies for your business operations, while insurance advisers can explain the options available for risk transfer to insurance. With clarity on your risk transfer and insurance needs, you can make informed decisions.
How can you evaluate the risks in your business for insurance?
It’s prudent to consider the following:
- What are the challenges and opportunities in your business?
- Are there any gaps or exclusions in your insurance program that could leave your business vulnerable?
- Are the insurance policy limits sufficient? If not, does this place pressure on your cash flow and reserves?
- Are you confident that your insurers comprehend the unique needs of your business?
Is Underinsurance an Issue?
Underinsurance is prevalent in Australia. Underinsurance occurs when businesses set sums insured that are not adequate to cover potential claims. As insurance advisers we encourage you to understand your insurance program and the sums insured thoroughly. If a claim exceeds the insurance limit, your business may face significant out-of-pocket expenses and may expose Directors to personal liability.
For property owners, obtaining independent insurance replacement valuations from qualified valuers can clarify replacement values, reinstatement costs, and time frames, thereby determining the appropriate sums insured.
What can you do if you have concerns about your insurance program?
If you would like advice on transferring risk to insurance, it’s advisable to reach out to your insurance adviser without delay. For additional support, Clear Insurance provides a no-obligation risk and insurance review for peace of mind, delivering a detailed gap analysis report that provides the insights you need to make informed decisions regarding your insurance program.
To schedule a consultation, contact Lisa Carter at lisa.carter@clearinsurance.com.au or call 1300 721 132.
General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.
Clear Insurance Pty Ltd. ABN. 41 601 916 689. AFSL No. 548953.
