Another week, another business goes to the wall. Not a week goes by at present without an announcement of another business closing up shop,ceasing to trade due to unprofitable trading, leaving tens of people if not hundreds of people out of work.
Of course this has a flow on affect to the wider community with the now defunct firm’s suppliers being impacted through reduction in revenue & possibly bad debts.
For the many businesses that remain in business, these continuously increasing insurance costs only add to the pressures. Insurers have been hit hard with regular major claims events over the last 2.5 years, starting with the Kinglake/Marysville bush fires, the 2012 March massive storm both occurring in Victoria, flood & storm events in the northern states and our international neighbours NZ and Japan hit with earthquakes. All these events have resulted in massive payouts by insurers with re-insurers fitting the bill for the majority of clams paid.
Of course at the end of the day someone has to pay and these events inevitably contribute to rising insurance costs. In fact home and contents insurance costs have increased substantially in the last 12-18 months with insurers becoming much more selective in what they will or will not insure.
Commercial insurance costs have been largely unaffected by the recent push for increased premiums from insurers although this good news has been overshadowed by substantial increases in Fire Service Levy (FSA). In fact if your business is based in a CFA designated area, the FSL has just been increased to 95% of the base premium. Once GST & Stamp duty are added, the base premium more than doubles. You might not think this is relevant to you, however CFA designated areas include suburbs such as Dandenong, Hallam, parts of Springvale which most of us would assume would be regarded a suburbs of Melbourne and therefore deemed to be serviced by Metro Fire Bridge (MFB) rather than CFA fire stations.
So what steps can you undertake to try and avoid some of these issues and potentially reduce your insurance costs?
Review and maintain your current insurance cover when your reserves start to reduce due to smaller profits it is more important than ever to have adequate cover as it becomes more difficult to provide or source funds in the event your insurance cover has lapsed leaving you exposed to uninsured events
Review your credit policy and manage your debtors more vigilantly; the last thing you want is exposure to bad debts; you may or may not be aware you can get insurance against bad debts although the cover can be costly. Pro-active and vigilant debtor management is essential but if you have concerns regarding your debtors, we can assist you.
One possible way to avoid the impact of increased FSL, relevant to businesses based on the cusp of MFB/CFA boundary is to seek a letter from the local MFB seeking confirmation of attendance in the sake of Fire Emergency.
Maintain your own personal insurance cover as one potential repercussion from working harder is the advent of stresses on your body. The last thing you would want is ill health to impact of your work output but in the event that a bad health scenario arises, your personal insurance covers in the form of income protection and/or possibly Trauma cover can go a long way to alleviate the concern of reduced income due to an incapacity.