Government increases cost of business insurance

 

George Osbourne at the Budget 2010As from 4th January 2011 Chancellor George Osborne will increase the insurance premium tax rate from 5% to 6% (20% from 17.5% on products leived at the higher rate)

Is this an attack on business and the commercial insurance environment?

Well, it could be argued that the exchequer is just reclaiming money they have lost given that insurance rates have reduced significantly over much of the last decade. However, it seems that the timing of this move during a period of economic unrest is probably not a popular one.

So how should companies deal with this increase in terms of their own insurance programmes or premium spend?

The primary way is to ensure that companies get their arrangements reviewed. Business Insurance is still a hugely competitive market. Essential Risk Solutions Ltd undertake free reviews for all sizes of companies. Our job is to ensure that the best cover can be obtained for the premium spend avaliable. Any company that is now not having their insurance arrangements reviewed independently these days could seriously be paying more than they need to.

Is cutting cover the answer?

In a word NO!!!!! False economy is never the answer to an economic issue. There are always savings to be made and with right advice and discussion, maybe certain cover exists with only the potential for a very small loss and to self insure might be the answer. However, removing huge chunks of cover purely for cost savings can is more likely to ruin the company in the event of a substantial claim.

In addition, never be tempted to reduce the amount of value of the insurance cover provided on physical assets. Insurers would only reduce a claim proportionately by the amount it is under-insured.

Essential Risk Solutions Ltd is a commercial insurance brokers based in leicester. We are entirely focussed on customer service and value for money. If you wish to speak to us concerning your insurance requirements, please contact us today.

 
 

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