Is Your Business Ready for Its Next Big Risk?

Is Your Business Ready for Its Next Big Risk?

A growing business has a familiar checklist.

Hire more people. Open an office at a new location. Buy better equipment. Move into a bigger office. Invest in technology. Take on larger clients.

Insurance usually isn't at the top of that list, and that's where the problem can begin.

Growth changes more than your revenue. It changes the number of things that can go wrong, the value of what you have to lose and the responsibilities your business carries.

A policy that made sense when you had 20 employees, one office and a smaller asset base may not necessarily be enough when the business has doubled in size.

In other words, your business may have grown. Your risk exposure may have grown with it. Has your insurance kept up?

Growth Changes Your Risk Profile

Consider a business that starts with a single office, a small team and limited equipment.

A few years later, it may have multiple locations, a larger workforce, expensive technology, company vehicles, more inventory, more suppliers and larger contracts with customers.

Every one of those changes can introduce a new risk.

A new location could mean additional property exposure. More employees could increase your employee-benefit requirements. New technology can introduce cyber and equipment risks. Higher-value assets can change the amount of property insurance you need. Larger contracts may bring new contractual or liability obligations.

IRDAI notes that SMEs can have insurance requirements spanning property, machinery, electronic equipment, workers’ compensation, public and professional liability, money in transit, fidelity and employee benefit covers such as group health insurance.

This is why commercial insurance shouldn't be treated as a one-time purchase.

It should evolve alongside the business.

Your Location Changed. Did Your Policy?

Opening another office, warehouse, factory or branch is a business milestone.

It is also an insurance event worth reviewing.

Your existing policy may have been structured around your original premises, assets and operations. Adding another location can change the nature and extent of the exposure.

The same applies when a business expands into a new geography or starts operating from multiple sites.

A good insurance review should therefore ask:

• What locations do we operate from today?
• What assets are kept at each location?
• Has the value of those assets changed?
• Are there new processes or operations?
• Have new employees, contractors or vendors been added?
• Have our liability exposures changed?

The answers can be very different from the ones you gave when the policy was first purchased.

More Employees Means More Than More Payroll

Employee expansion is usually viewed through a hiring lens.

Insurance should look at it differently.

A growing workforce can mean changing requirements for group health insurance for businesses, group personal accident, employer liability and other employee-related covers.

For companies looking for the best group health insurance plans for SMEs, the cheapest premium shouldn't be the only consideration. Employee demographics, coverage structure, network, claims support and the benefits employees actually value all matter.

The right solution should reflect the workforce you have today, not the one you had when the business was smaller.

New Technology Creates New Questions

Technology is now part of almost every business.

Cloud platforms, digital payments, customer databases, remote access, connected systems and specialised equipment can all make businesses more efficient.

They can also create new exposures.

A business that has become more digitally dependent may need to think beyond traditional commercial insurance and consider whether cyber, electronic equipment or other specialist covers are relevant to its operations.

The important question isn't simply, “Do we have insurance?”

It is: “What could stop our business from functioning today?”

That question can reveal risks that weren't relevant a few years ago.

Bigger Assets Need A Bigger Conversation

Growth often means buying more equipment, increasing inventory or investing in better infrastructure.

That should trigger a review of your insured values.

IRDAI notes that property should be insured with reference to its actual value and explains that underinsurance can result in the insured bearing a proportionate share of a loss.

So if your business has expanded significantly, don't simply renew the old numbers because they're already in the policy.

Review them.

Liability Grows With The Business Too

A bigger business usually means more customers, suppliers, employees, contracts and interactions.

That can mean greater exposure to claims involving third parties.

Depending on the nature of the business, this may make business liability insurance, commercial liability insurance, professional liability or product liability worth reviewing.

The exact cover required will depend on the business and its contractual and operational exposures. The point is not to buy every available policy.

It is to identify the risks that actually matter.

So, Is Your Business Ready For Its Next Big Risk?

Before the next renewal, ask a simple question: if someone described our business today without looking at our insurance policy, would the two descriptions match?

If the answer is no, it may be time for a review.

An insurance broker can help businesses assess their current risk profile, understand available options and compare insurance solutions. IRDAI's framework for direct brokers includes understanding the client's business and risk-management philosophy and providing comparisons where there is a choice of products.

Because business growth shouldn't come with a growing list of insurance blind spots.

Your business has moved forward. Your insurance should move with it.

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