7 Solid Reasons Smart Business Owners Should Consider Excess Cover Policies

by | Aug 16, 2019 | Articles

Excesses on short-term insurance policies for businesses could range from a few hundred Rands to tens of thousands of Rands. On big ticket items like trucks, buses, LDVs or plant and machinery, the first amount payable when a client must claim could leave them in a tight spot financially and have a detrimental impact on their company.

At the time clients take out a policy, they hope for the best; that nothing bad will happen. For this reason, the excess is often overlooked and not budgeted for. However, when the unforeseen happens and they must claim they have to dig deep into their pockets and don’t always have the cashflow. As the famous UK business man Richard Branson says, “Never take your eyes off the cash flow, because it is the lifeblood of your business.”

There are several strategies business owners can follow to ensure that they are properly prepared for big claims, including prevention, risk-management, insurance cover and knowing exactly what their excess exposure is (uninsured portion of the claim).

Business owners who qualify can take out a short-term insurance policy to reduce their excess exposure.

Ibiliti Underwriting Managers offers a stand-alone excess policy. CEO, “We can buy down almost any excess across multiple types of underlying policies. These include the non-motor sections of a commercial policy including property, machinery etc, private motor, light delivery vehicles, commercial vehicles, plant all risks, goods in transit and professional indemnity.”

According to Van Niekerk, the excess buy-down product has advantages for clients and brokers alike. “The consumer saves money in the event of a claim. If your client places their excess with the same underlying insurer, it will have a bigger effect on the loss ratio. If the excess is, however, placed with an independent supplier the portfolio will show much better results.

“Brokers can offer clients excess insurance as part of their renewal process with minimum effort to increase the value of their portfolio without having to source new clients. It is also the ideal opportunity to explain to clients the different kinds of excesses, including basic, voluntary, additional and penalty excesses and make sure they are aware of the financial impact of these.”

When offering this product to your clients, here are 7 solid reasons why smart business owners should consider taking out an excess policy:

  1. Their underlying policy excess will be waived or significantly reduced.
  2. Improved cash flow when they claim.
  3. The impact of claims will become more predictable.
  4. Peace of mind because they have addressed the risk of unexpected excess amounts due in the small print.
  5. Clients may have more than one South African short-term underlying policy. All their excesses over multiple policies can be consolidated into one excess policy to provide for their multiple excess exposures.
  6. They have the option to reduce almost any excess.
  7. They would be able to put the money they would have paid towards their excess to better use in their business.

“We would like to encourage you, our brokers, to analyse the excesses payable on your clients’ policies and investigate options to reduce the portion for which they are responsible,” concludes van Niekerk.

Ibiliti Underwriting Managers guarantees a 24 hour turn-around time on all approval of quotations/endorsements and amendments.