Why insurance premiums increase

Insurance premium increases look likely for both business and domestic policies over the next 12 months.

If you haven’t made a claim and nothing about your circumstances has changed, this can be extremely confusing.

We’ve put together the following information to help you understand why you might be affected by premium increases on renewal.

We’ve enjoyed a long period of low premiums

In certain sectors and markets, insurers became ultra-competitive about 10 years ago. They slashed premiums to gain business and market share.

In the past 10 years, many policy holders have had no or minimal increases in their premiums.

Unfortunately, these figures can’t be sustained forever and as a result, we’re starting to see premiums rise.

Costs have steadily increased

The cost of doing business has increased in recent years. While people enjoy wage increases and all that this brings with it, this means it’s more expensive to run insurance companies. Insurers need to pass those costs on if they are to remain in business.

Insurers can’t protect their profits by reducing costs. The number of claims they pay out is beyond their control. The only alternative for them is to raise income in the form of raising premiums.

Catastrophic conditions and reinsurance

The cost of your insurance policy depends on the relative risk involved. In general terms, low risk means lower premiums and high risk means higher premiums.

Risk is partially determined on claims history. In recent times, Australia has been seized by a range of catastrophic events. From damaging storms to floods to raging bushfires. This means one thing to insurers – lots of claims. We seem to be living in an age of increased risk. Therefore, premiums need to rise to ensure there’s a big enough pool to pay future claims from.

But it’s not even quite that simple. Most insurers have reinsurance arrangements. Put simply, reinsurance is insurance for insurers. Using reinsurance arrangements, insurers essentially transfer portions of their risk to other parties to reduce the likelihood of paying an exorbitantly large claim. Because claim levels have been so high, reinsurance costs have gone up.

Starting to see a pattern?

Increased premiums for specific types of insurance

Certain types of insurance policy premiums have been maintained by insurance companies at little financial gain to them. Industrial Special Risks (or ISR) policies are a prime example.

Insurers are now looking at the less profitable parts of their business and seeing what they can do to make them earn their keep. Insurers are increasingly raising premiums in areas that have been underperforming for them.

Litigation levels are on the rise

The number of class actions against companies and the directors and offices of companies have increased, as has the level of damages awarded.

Very often it’s a company’s insurance that covers the costs involved in defending action brought against them and it’s the insurance that covers the costs of any damages incurred.

Will insurance premiums go up forever?

It’s unlikely. The truth is insurance premiums operate in cycles. What goes up will eventually come back down.

We can’t predict exactly how long that will take, but when premiums do begin to reduce, we’ll be on the front foot to secure lower premiums for you.

We’re on your side

Whilst we may not be able to stop increases in premiums, we’ll do our very best to mitigate them for you.

Rest assured that when it comes time to renew your policies, we look at them closely. We consider alternative policies and insurers and we market your policy to secure you the best premium possible.

If we can find you a better deal, we will.

Why saying no could save your sanity… and your business.

In Aesop’s fable, The Man and His Two Sweethearts, a middle-aged man, whose hair had begun to turn grey, courted two women at the same time.

One of them was young and the other much older. The elder woman, ashamed to be courted by a younger man, made a point of pulling out some of his black hairs whenever he visited.

The younger, on the contrary, not wishing to become the wife of an old man, was equally zealous in removing every grey hair she could find.

In the end, between the two, he ended up bald.

Moral of the story: try to please everyone, you please no-one.

Your life is hectic

It’s a challenging role being a business owner. Customers have questions, demands, expectations. Staff have problems they want you to fix. The government, ATO, Local Council, Fair Work all have policies, forms, and penalties if you don’t comply.

Every time you are meeting other people’s expectations. Saying yes to them, at a cost to your own time & well-being.

And Covid-19 has ramped that through the roof.

It’s why one little word just might save your sanity.

The power of no

It feels odd to say no. For many of us, we want to please others. After all, as social beings, our survival depends on the good will of others. Saying no can leave people with a sense of guilt or embarrassment.

For business owners this can be doubly so. We are meant to be opportunistic, problem solvers, ambitious.

Yet.

By saying “No” you are unconsciously saying “Yes” to your self-value: I am putting myself ahead of you. No sets boundaries. It says within here what I choose matters.

It’s why people who try it for the first time report mixed emotions but also a profound relief: “you feel better for it”.

Other more tangible benefits:

• It gives you more time – for the things that matter. That you have chosen.

• It increases your self-confidence. After all, nothing beats saying I am worth it.

• It gives you more control in your life.

All three are known factors in a happier, healthier emotional life.

Saying no ironically gets you more respect from others.

So, give it a go.

When a member of your team come to you with a problem, ask them to come back with possible fixes for your input.

When a potential customer starts haggling about money, say thank-you but you are in business. “We all have to make a living”, your prices are fair and try their luck down the road.

Is your business making you stressed? Here are five ways to manage your mental health

It’s 8 am. Your ear's being chewed off by a dissatisfied customer on the phone, a staff member has just texted in sick, and you’re dreading opening the pile of bills on your desk.

Your heart’s racing, your shoulders are tight, and you feel like you could snap if one more thing goes wrong.

It’s not surprising that a 2019 MYOB survey showed that more than half (56%) of small business owners had feelings of anxiety or depression caused by running their own business. It’s a stressful gig.

And that was before the Coronavirus reared its ugly head.

Now 2 out of 3 small business owners say Covid-19 has impacted their mental well-being. You need to take note of the warning signs and manage your stress.

How can you look after your mental health?

1.       Take a deep breath.

Have you noticed that when you’re stressed, your breathing changes? You take small, shallow breaths as part of your body’s ‘fight or flight’ response.

Unfortunately, that makes your stress worse.

Even a few minutes of deep breathing will bring more oxygen into your blood. Your heart rate will slow, the number of stress hormones in your blood will reduce, and you’ll feel calmer.

Give it a go - it’s easy to do and works quickly.

2.       Take exercise.

Make time for some regular exercise. It doesn’t matter what type – choose something you’ll enjoy and make into a habit.

It all comes down to the chemicals in your brain. Aerobic exercise reduces the stress hormones in your body, like adrenaline and cortisol.

Plus, it increases the ‘happy hormones’ like endorphins that are natural painkillers and mood elevators.

3.       Get outside.

Did you know that being outside in nature helps your stress levels?

It's been proven that taking 20 minutes to stroll or sit in nature will significantly lower your stress hormone levels.

So, you can take your exercise, breathe deeply and be out in nature to improve your mental well-being.

4.       Connect with family and friends.

Make the time to connect with supportive people in your life.

Knowing you’re not alone can be a big help in managing your mental health. A 2015 survey found a significant drop in stress level for those with emotional support compared to those without).

So, pick up the phone, jump on Zoom or meet up in person – socially distanced, of course. Just connect with people who support you.

5.       Be kind to yourself.

There’s a reason you keep hearing about “these unprecedented times” – because they are unprecedented.

There is no roadmap to follow. It’s okay to say no to things or to feel uncertain.

Everyone is finding their own new normal, and it’s vital to be kind to yourself.

Reach out if you need help

If you’re struggling, don’t hesitate to reach out to your GP for a mental health care plan.

There are also many fabulous online resources available such as beyondblue’s special 'For small business' section on their website.

And if you need to talk to someone now, you can call:
Lifeline – 13 11 14

These lines are free and available 24 hours a day.

Small oversight – big cost

Steve* started his new road freight transport company in June 2019. He did the smart thing and took out all the insurance he needed through a broker.

But two months later one of his trucks was involved in a bingle and hit from behind. Steve wasn’t at fault, but he went ahead and lodged the claim through his insurer’s 24-hour hotline.

The insurance company told him to pay his $1,837 excess, which he promptly did.

Luckily, there was no damage to his truck, and the third-party loss was successfully denied by the Insurer.

Bonus.

The insurers refunded the excess and Steve got on with running his business. He didn’t think another thing about it – until his renewal arrived.

Bill shock

Not only had his no-claim bonus been wiped, but his premiums had also increased.

Steve still hadn’t thought to tell his broker about the accident. Brett only found out when he requested a copy of the claims’ history, standard procedure for all renewals.

He jumped on the phone to Steve to find out what it was all about.

“But I wasn’t at fault,” Steve pointed out.

Examining the details

Brett looked closer at the claim. There was a nil cost to the insurer, and the claim cost was under the excess amount.

As the Insured was not at fault, and the third party damage was under the excess, the insurer had no right to reduce Steve’s no claim bonus. After all, it’s a no claim bonus, not a no loss/accident bonus.

Success!

Brett got on the phone to the insurer to argue Steve’s case, and after a few rounds of back and forth calls over the day, the insurer agreed.

Steve got him no claim bonus back – saving over $1,300 on his renewal. A significant saving for the business.

Keep your broker in the loop.

Your broker is there to help.

When possible, go through them when you have a claim. Your broker can see who’s at fault and if you even need to pay your excess.

In Steve’s case, he could have avoided lodging a claim and paying his excess. And that would have saved the mix-up that saw him spend his money at a critical time and potentially lose his no-claim bonus.

Your broker knows all the ins-and-outs of your insurance. They can deal with the insurer for you and follow up with any claims. It saves you the hassle and lets you focus on your own business.

Of course, if it’s an emergency, the 24-hour hotline offered by insurers is fantastic peace of mind. But remember to contact your broker ASAP and let them handle it from there.

In a nutshell, always let your broker know of any claims you make. A good broker should check your claims history with you at renewal time, but you also need to do your part in keeping them updated.

* Name of the owner has been altered to ensure client confidentiality.

Five hacks to help you get the most out of your team while working remotely

Under the current social distancing, you and your team are probably scattered across different locations. And even after the restrictions lift you might choose to keep working like that.

So, how do you keep your team happy and productive when you are not all in the same place?

Here are five tools to get the most out of your team when you’re all apart.

1.       Keep up communication

A 2019 study showed that lack of communication leads to employees becoming disconnected and isolated. Not feeling part of the team can quickly turn to apathy about their work. And that is tough to monitor when you can’t see them.

So, what can you do?

In addition to work-related messages, set up the opportunity for daily social communication. Zoom coffee chats, dedicated social chat rooms in tools like Slack and Workplace from Facebook can all help.

It doesn’t matter how you do it; the important thing is to give everyone a chance to connect with the team around the digital “water cooler”.

2.       Celebrate achievements

Everyone likes to feel valued, and to know that they’re more than just an employee. A Gallup survey showed that employees valued public and private recognition more than a bonus or pay increase.

It’s even more important to celebrate achievements while your team is working remotely. It helps bring us all together and bind your people to you.

And recognition doesn’t just need to come from the top – encourage a culture of positive peer feedback.

There are many opportunities to celebrate:

·         project completion

·         hitting milestones

·         rewarding a display of company values

·         birthdays

·         personal achievements

·         or even just that it’s Friday!

Make your team feel you see them and recognize their achievements.

3.       Trust your team

If you’re used to over-seeing your team’s work, it can be challenging to let go of the urge to check up on them continually. But don’t micro-manage, it can lead to low morale. Trust your team to do the right thing, and they will deliver.

It can help to take the focus away from checking on daily tasks and focus on the results, not how long they were sitting in their seat.

4.       Encourage a healthy work/life balance.

When working from home, it’s hard to switch off, and too easy to work longer hours. A British study showed that 48% of employees increased their work hours. So, it's essential that you adopt healthy habits and encourage your team to do the same.

· If possible, have a dedicated work-space that you can walk away from.

· Stick to a finish time and don’t check your emails out of those hours.

· Have a break for lunch. Ideally, try to get outside for some fresh air and exercise.  

5.       Be understanding and flexible.

It's important to remember that now is a super-weird time for everyone. Your team are probably stressed about several things from health concerns to finances. They’re possibly juggling many extra responsibilities in their life like supervising their kids or schoolwork.

Where possible, the best thing you can do is to be flexible about the quantity and times of work. Your support and understanding will pay off with loyalty in the longer term.

A recent survey showed that 80% of people would be more loyal to their employee if they were allowed flexible work options. Something to consider for the longer term once the crisis is over.

The current situation won’t last forever, but how you handle your team now can have long-lasting effects on the future of your business.

A story of our times

Standing on the banks of the Wallagaraugh River, we watched vast dark waves of cloud bearing down on us. Ash and embers were falling everywhere.  The smoke was so toxic that many of us were sheltering in our cars.

We could see this glowing redness that was starting to encroach. 

All the while, a manic noise like an enormous demented spinning top thrashing out of control: loud and angry. 

And then a startling detonation as a tree exploded. The heat was searing, and we knew that fire, out of sight, was bearing down on us.

By 6.00 pm that night we had lost all mobile reception.

Hundreds of us huddled along the water edge, terrified of the fire, as close to the safety zone as possible.

My asthma was playing havoc and I was struggling to breathe through all the smoke. My fear and anxiety peaking. I lay down on the floor of our car with a wet towel over my face.

It was a rough night.

Blood red sky

When I woke up, it was pitch dark. Looking around, I noticed Boris standing outside of the car and got up to join him.

I asked him what time it was “6.30am”. New Year’s Eve.

It was as though the sun had forgotten to get up. Even later it was only as the fires grew nearer that the skies turned blood red. And all the while the ferocity of the fires created their own wind blasts and explosions.

The great Aussie tradition

Boris and Vickii Srbinovski had been making the annual Christmas holiday pilgrimage to Mallacoota for twenty-three years. Hauling their caravan to a seaside town for two and a half weeks of rest and recreation. Spending times as a family and catching up with the annual neighbours.

They arrived late on the 22nd December and soon settled into old routines. However, checking their mobiles for updates on the summer’s bush fires was still a daily activity.

On the 28th December they were advised to either evacuate or stay. The Princes Highway was going to cut off by the fires. They decided to stay and wait it out.

An endurance battle

Then on 30th December at Baston beach, the patrol called them all in and said that all resources were being redeployed “enact your fire plan and stay safe.”

Later on New Year’s Eve, Boris & Vickii returned to Mallacoota from their appointed safety zone. Smoke everywhere, huge flames on the horizon and now a new noise – exploding gas bottles.  The sky stayed black for a few hours then changed to blood-red.  The fire had arrived 150 meters from the water edge.

With limited mobile reception back on it was a relief to speak to the children, “Tears overwhelmed me". They had watched the horrific images on the news. They had no way of knowing where we were if we were safe.

The next days were spent in stunned silence. My asthma was so bad I was constantly lying down on the floor of the car with a damp towel over my face. Wondering how this would all end.

On 3rd January 2020, Boris and Vickii along with 1,000 other people were evacuated on the HMAS Choules. It was part of the largest maritime evacuation in Australia, ever.

What is precious

I love life. I live for today. After an experience like that everything becomes more precious. Yes, I have to work, but I say to Boris what are we going to do today that really matters. For me, it is with family friends and doing things that have real meaning to me.

Who knows where they will be tomorrow?

Is your message cutting through the noise in their heads?

Right now, the noise inside the heads of your customers, staff, and stakeholders has hit 11.

And whatever business you are in, you are also in a state of heightened alert.

Under stress, people get caught up in their anxieties, fears and pain.

It is understandable.

People’s sense of control is disintegrating. Instinctive unconscious neural programming is taking over, and survivalist behaviour wins. Fight, flight or freeze.

Under those circumstances, the impact of most communication plummets by 90%. 

Yet now, more than ever we need to communicate with everyone, often. Clearly. Effectively.

Principles to follow.

1. Be clear about the Purpose.

Effective communication is about changing people’s thoughts, ideas and beliefs so that they change their behaviour. So be clear and explicit about where they are now, and where you want them to be.

The comunication is all about them and the change you want them to make.

2. The three levels of communication.

➢ Context – where it is taking place, why it is taking place.

➢ How – the tone of your voice, the emotional undercurrent, inflexion.

➢ What – the words.

In terms of the impact it goes Context 50%; How 40%, What 10%.

People will remember the emotional feeling of the messages long after the words are forgotten.

3. "Humans are feeling machines that think."

Emotions dominate human behaviour and drive most decisions. Even in business. So, address their hearts and feelings. Frame the communication in their world, their language, and what's in it for them.

Double-check all your communications, read it as if you were receiving it. How would you feel if you received that?

4. Be very simple, clear and direct

Use simple language, would a twelve-year-old understand it? Be explicit and direct. If there is ambiguity or your audience must think, then it won't work.

Whatever your political views for a master class in communication view Jacinda Ahern’s recent address to the nation

5. Repeat it. Often.

As anyone working in sales and marketing knows it takes between 8-13 times before your messages get through. So, say it once and repeat it. And get their active "yes, I understand."

Above all, be clear, honest, and compassionate. Your audience is struggling.

3 online apps to organise your business

Have you ever woken up thinking “I have so much time to fill today?” It’s probably highly unlikely with everything you have to juggle every day. You’re more likely wondering where you can find extra hours!

The good news is that making your work hours more productive is almost as useful as finding extra hours.

Here are just a few of the most popular apps and software that may help your small business be productive. Obviously, they’re not a magic solution (wouldn’t that be nice!) but take a look to see if any of the tools could help your business.

And because all of the solutions are online, they may be what you need to stay organised if your team has to work remotely in the future.

Trello for project or task management

The primary reason projects fail comes down to missing deadlines. Using project-tracking software can help keep you on track, so you hit your targets each time.

Trello is an online tool to help you organise projects. And it doesn’t matter if you’re part of a team or working alone – it’s just as useful.

It gives you a visual representation of the status of your tasks. Think of it like a white-board full of post-it notes that you can move around depending on where your task is up to. You create columns for each stage in a project, like ‘in progress’ or ‘completed’ – it’s up to you what you call them – and a card for each task. Then you just drag and drop the cards into the right column as your tasks progress.

Trello is free in its basic form, but you can buy ‘power ups’ to do more advanced features like linking to a calendar.

It has 50 million users across Windows, macOS, iOS, Android and web apps.

Slack for communication and collaboration

Information comes flying at us every day, both in work and personally, and it can be hard to keep track of it all. You need some way of organising it, and to keep your personal and work messages separate.

Slack is an online tool that lets you simplify your communications. It’s like a chatroom for teams which you can split into different ‘channels’ for different projects or workgroups.

It also makes it easy to share files to your team. Altogether it means you can keep all your information together without having to search through emails and folders to find what you need.

It’s free for the basic features, but if you want more functionality, there’s a pricing model with a cost per user/per month. You can use it for web, desktop for macOS and Windows, and mobile for iOS and Android.

Evernote for organising your notes

Do you jot down thoughts and ideas everywhere and then can’t find them? Take handwritten notes in a meeting and want to search them? Find information on the web but then forget where you found it?

Evernote is a cloud storage note-taking app that lets you save and search everything including emails, handwritten notes, photos and screen clips of websites.

You can organise your notes in notebooks and ‘stacks’ of notebooks to keep information together, but the most powerful feature is the search. It searches for keywords in attached documents, photos and even handwritten notes!

It also lets you sync your notes across multiple devices. So, you can take a note while out and about on your phone and then sync it with your computer. And you can even share selected notes with other members of your team.

Evernote is free for basic use, but there’s a monthly fee for heavier users. You can use it for web, desktop for macOS and Windows, and mobile for iOS and Android.

Find more time in your day

So, there you have it. Three tools to feel like you have more hours in your day. It’s not as good as magically making each day 28 hours long, but it’s the next best thing.

Disaster strikes:

Saturday 8th February evening: an intense storm, an East Coast low, sweeps through the northern suburbs of Sydney. Typical damage and little media coverage.

Sunday 9th February 4.45 am: the head baker arrives at the Franks’ manufacturing plant. No power. An urgent phone call to David & Anne Franks.

Sunday 9th February 5.25 am: David conducts a torchlight inspection. Extensive ceiling damage and the floors are starting to lift. Sharp expletive.

There is no way they will be doing any baking today. Or anytime soon at this factory.

And they have eight outlets waiting for freshly baked cakes, pies and bread ready the early morning Monday rush-hour.

With nothing to sell.

Sunday 9th February 5.45 am David makes an anguished, desperate call to Sam Woods, his insurance broker.

Sam Woods had been working with David and Anne since they opened their first onsite bakery shop. Through long hours, hard work and perseverance their business had blossomed.

It could have been catastrophic.

Their Salvation #1 the insurances

However, Frank and Anne regularly met with their Sam and kept him informed on how their business changed. Which meant that Sam had set up their business interruption insurance to cover losses across all sites, rather than a specific policy for loss of Income from each.

That one small difference in how the policy was structured was critical. 

It meant that rather than being forced to lodge a claim of losses per location, or, being limited to 20% of the operating losses from the eight retail store sites, they could claim the total losses across all locations.

At $17,000 a day that was a big deal.

Sam worked with the insurer and met with the assessor on site to confirm this claim was more than just a loss of power claim. A loss of power claim would have resulted in a 48-hour waiting period for loss of income.

But Sam was able to confirm that the damage was more than just a loss of power claim. Because of that it meant rather than a two day stand down excess:  $34,000, they only had a $500 excess.

Lastly, Sam had made sure that their business pack insurance included $150,000 of working cover. Rather than the typical $15-20k included on a standard business pack. This extended cover will be critical when they re-open and look to attract customers back in store.

Their Salvation #2 disaster recovery

Although Sam had successfully curtailed their immediate losses. David & Anne still had big headaches. They had the assessors to deal with, in which Sam acted as their advocate ensuring they got all they were entitled.

They also had to think through the different options in front of them: Should they shut down some locations? Should they buy in baked goods? Should they resume onsite baking at some sites? Should they find a new factory?

Each of these with different implications and costs.

Sam spent a full day listening, acting as a sounding board and giving them disaster recovery templates to help. Frank and Anne were able put together a recovery plan, giving them some peace of mind.

The one smart thing

It’s early days but David & Anne are now feeling positive about their future, despite having little choice but to close their business for the next 7 weeks. Sleeves rolled up and making it happen.

One of the smartest business decisions they made was working with their broker, as their business grew. So Sam could advise them and give them the right cover to suit their business at each stage.

Otherwise, they would have had interruption cover of just 20% lost income for those dependent retail locations that were not damaged. And only $15k to spend on a back to business campaign rather than $150,000.

They would have struggled through the disaster recovery on their own and may have ended up as a statistic on the number of businesses that fail to re-open after a disaster

Postscript: Monday 17th February David phoned Sam and asked him to quote on all their other insurances…” our other insurers don’t help us; not like you do."

Six hacks to conserve your most valuable business asset – your mental energy

Being a business owner can be a little like being a member of the RFS over the last summer. Constantly putting out fires with no relief in sight.

You wear so many hats: chief customer officer, supplier relationships manager, IT help desk, Operations manager, staff manager and counsellor, finance, admin clerk….

All the time juggling your various roles. And doing your own job.

No wonder you can end up feeling tired, stressed, cranky pants. Quite simply you are on high alert and making decisions all the time. Your brain gets tired and you revert to default unconscious behaviours.

Your brain is an energy hungry beast

Your brain consumes 25% of all the energy that your body uses. And the executive part of your brain, the part that makes decisions is particularly hungry.

After 20-25 minutes it just winds down. Over a day you will have between 2-3 hrs of energy reserves for high level problem solving, decision making and communication. After that your brain goes into wind down, and all you are doing is reacting. Without thinking.

The 6 personal leadership hacks CEOs of multi-billion-dollar companies use

The following personal leadership tips apply to all business leaders. We are all human and we all need to conserve our vital mental energy. It’s just that CEOs of ASX 100 companies will pay their leadership coaches tens of thousands of dollars a year for this stuff.

1.       Take control of your day

It’s yours; don’t let other people fill it up with their stuff. Prioritise the important – the things that are going to really change the business, and not the urgent. Often, they are problems that can be solved by others. Empower and delegate.

2.       Have a brain dump list.

Create a list of everything that’s on your mind – all the tasks that you need to do, the mental notes you need to remember – and put it on paper or in digital form. That frees up your brain to focus on more important things. 

3.       Do things that require the most mental energy in the morning.

We have a limited amount of brain energy for the day. If you have big decisions to make or brain-draining tasks, do them first thing before your brain has become overwhelmed with the little things. (Like everything – your mileage may vary. Another time of day may work better for you).

4.       Set up routines and processes.

The more familiar a task is, the less you must think about it, the fewer decisions you need to make, and the less working memory you take up.

That’s why successful people like Steve Jobs and Albert Einstein wore the same clothes every day. They saved their brainpower for more important decisions.

And when you’re learning a new task, document it so that you can follow a process and don’t have to rely on your memory.

5.       Have set times and time limits for email etc.

Limit the amount of information pouring into your brain by having set times and time limits for when you check your email, social media and other information sources. If possible, close the applications down when you’re not using them. And turn off notifications – having your phone ding or a notification pop up on your screen when you’re in the middle of a task destroys your focus.

6.       Take regular breaks.

The science is clear. Our brains need time to relax and refresh. It leads to better business outcomes. Take frequent breaks throughout your day to reset and relax your brain. Don’t just move on to a different mind-consuming task during your break – do something different to what you were doing, like take a walk around your building, or listen to music.

What to do when you have a cyber-attack?

The evidence is clear. Cyber-attacks are on the rise and small businesses in Australia are feeling the brunt of them. At some point your business will experience a cyber-attack and if successful the consequences could be disastrous.

To help you we have created a simple guide for small business owners based on expert opinion in the IT, cyber-attack recovery and insurance industries.

What to when you have a cyber-attack.

1.       Don’t Panic

It’s happened. How you now respond will have a critical bearing on the success of your recovery plan. So be calm, breathe deeply and know that this too will pass.

2.       Put your cyber disaster recovery plan in action

Just as when your business has a fire you have an evacuation plan, so it is with a cyber security breach. Both events are unlikely, though a cyber-attack is 10 times more likely than a fire, but with equally devastating effects. Put your recovery plan to work. *

3.       Contain the breach

Do not try to fix it, delete everything or pay the ransomware yourself. The cyber security experts need the evidence to assess how it happened, who was responsible, the impact and to develop remediation plans.

However, do:

• disconnect from the internet

• disable remote access

• change business critical passwords

4.       If you have cyber insurance, call your broker. Immediately

This is why you have cyber insurance. So that the experts are called in to fix the mess. Put in place a remediation plan. And your broker is the go-to person to pull it all together.

Claim time is the moment of truth and your broker is your advocate.

5.       Contact your IT team

Once you have spoken to your broker then contact your IT team. They will provide the support that the cyber security experts will need. But please be aware that detection, elimination and remediation of cyber security breaches are skilled jobs.

Alternatively, if you don’t have cyber insurance, they will need to put into effect their disaster recovery programme for a cyber-attack. It is likely to involve the very significant out of pocket expenses.

6.       Get cracking yourself

If you have neither cyber insurance nor an IT team it’s all on you. In which case you will need to do all the following:

·         Call in specialist IT cyber security team

·         Determine the scope and nature of the breach which could result in any number of the following:

o   Notify the Office of the Australian Information Commission if there has been any loss of private data

o   Notify any affected customers and suppliers.

o   Put in place a compensation plan for any losses that your customers, or suppliers had.

·         Fix the breach and put in place actions to prevent any future attacks being successful.

All of which will take a lot of your time, focus and money.

If you want and help with this, even if it is just to start putting a plan in place please feel free to contact your insurance broker. It’s what we do for all our clients that ask.

*For those interested the Chubb Cyber Index is a useful resource to learn more about cyber risks https://chubbcyberindex.com/#/splash

The secret sauce recipe for a successful 2020

You’re back at work, ready to kick butt for another year. You’ve reviewed how your business went in 2019, you’ve made a business plan for 2020.

But how do you make your plans work, and last longer than a ‘New-Year’s-resolution-gym-goer’?

The secret is in how you set your goals. And there are two key ingredients in the secret sauce of your success.

Being specific and being accountable.

Be specific

Quite simply this is: What will you do? When will you do it by?

When you’re specific about your goal, you know exactly what you’re going to achieve, when, where, and how you’re going to do it.

By planning the steps, you need to meet that goal, your mind focuses on what you need to do and how you need to act to achieve it.

You literally change your behaviour to reach the goal.

The unconscious psychological “attentional bias” effect comes into play and starts working for us.

The world leader in the science of goal setting is Dr Edwin Locke. In a major decade long study, he found that 90% of the time, setting specific and challenging goals led to higher performance.

Business studies have validated this. Businesses that set specific goals have a higher success rate and are 147% more profitable than those who don’t.

Be accountable

Psychology professor Dr Gail Matthews ran a study where she found that accountability was the other key factor in achieving goals. One group of subjects in her research had to share their concrete plans with another person and then had to send them weekly progress reports.

Over 75% of this group achieved their goals compared to just 35% in the non-accountability group.

But be careful who you share your goals with. Don’t just send them to your best mate who will say “oh well, there’s always next week” when you miss the mark. Find someone you respect, who will work with you and hold you accountable.

So, there you have it – being specific and accountable will significantly increase your chances of hitting your goals.

What are your specific plans for 2020? Who will hold you accountable?

It’s never too late to start. Commit now to be a success in 2020.

Looking forward, looking back

You’ve sorted your Out of Office message, changed your voice mail and turned off the computer for the last time in 2019. 

There’s one more thing you should do before you slip into holiday mode.

And that’s look back at the Good, the Bad and the (hopefully not) Ugly of your year with an annual review.

There’s no need to groan – it doesn’t have to be a formal process with charts and figures. Just pour yourself your favourite drink, grab a notebook and pen and put your feet up.

What’s the point of an annual review?

As Winston Churchill once said, “Those who fail to learn from history are condemned to repeat it.”

An annual review makes you think about what went wrong and what worked well. And once you know what’s not working, you can make a note to change it next year.

What do I need to do?

There’s no right or wrong way to do an annual review. Sure, there are lots of templates available if you want to fill in boxes, but otherwise, make it easy on yourself.

Think back over the year. What went well? What didn’t? Make some notes of what you’ve learnt and how you can improve next year.

These questions may give you a starting place.

1.       Did you have cash-flow problems? What can you do to smooth out the bumps for next year?

2.       Do you have enough financial information to make the right decisions? Do you need better reporting?

3.       Did your marketing and advertising efforts pay off? Should you change your approach next year?

4.       Which products or services went well this year, and which didn’t? Do you need to change your offers?

5.       How are your insurance policies? Are your current policies covering you for what you need?

6.       Did you have any process issues? What could fix them? Do you need to tighten your employee or client onboarding processes?   

Once you’ve jotted down some notes of how your year went, put it away and then come back to it fresh next year.

The notes you’ve made can be a great starting place to set yourself up for good habits and feed into your business plans for a successful in 2020.

“This Epidemic of underinsurance could be totally shattering”

Underinsurance – where you take on the cost of paying out, if a risk event happens, yourself.

Which is fine if you know about it.

But if you don’t, and the risk event happens you could be in for a huge shock. Simply put, if you insure your house for $300,000 and it costs $500,000 to rebuild, then you are fitting the extra bill of $200,000, not the insurance company. That means you are under insured by $200,000.

And a recent survey by MCG Quantity Surveyors estimated that thousands of Australian homes could be under-insured by up to 66%. *

The cause – reliance on web-based calculators promoted by insurance companies.

“Not only do these calculators tend to underestimate construction costs overall. Most don't include amounts for demolition, debris removal, cost escalations, and consultant's fees.”

If it’s cheap, you’re probably paying for the risk.

Insurance companies can get caught up in price wars and as consumers, we play along. After all who doesn’t want a cheap price. Then the arrival of the digital world opened a whole new world making it easy to go online and get a quote. Even buy it, if you felt the price was right.

But the as the saying goes “caveat emptor” or buyer beware – which means reading through all the fine print and becoming a part-time bush lawyer. Because with insurance it is straight forward – if it’s cheap they have probably left stuff out. Stuff that you will have to pay for.

Or you could get advice

When you engage an Insurance Broker, they take the time to get to know you and your business so that they can ensure that there are no gaps, or where there are gaps you know about it. Only then can they identify all the risks that are there. Advise you as to the best protection for you, your family, your business.

Then it’s up to you. At least you can make an informed decision. What risks you want to protect and what risks you are prepared to fund yourself.

You are also protected by your broker’s legal obligation to act in your best interests, providing from a range of different insurers and different products.

As opposed to insurance companies acting in their shareholders best interests only able to provide their own product, simply not providing you with any choice.

However, if you like gambling then just play the insurance web calculator roulette.

* www.insurancebusinessmag.com/au/news/breaking-news/webbased-valuation-calculators-cause-an-epidemic-of-underinsurance--study

How to set up your business goals for success in 2020?

It’s January. The insanity of the peak silly season with its bizarre Christmas deadline a distant memory.

A time for New Year’s Resolutions. Stepping back from the business and thinking about your goals for 2020.

You might even spend time to create a plan. After all it’s a well-known formula:

• Vision – what do you want the business to look and feel like in December 2020. What’s changed, different, better.

• Strategy – how are you going to get there.

• Business Data – how has the business performed across all areas.

• Action Plans – specific things that need to be done.

• Measures – to check on progress. The cliché holds true you can’t manage what you don’t measure.

Except that like most New Year’s resolutions most business plans made in January rarely survive till March.

Why? Because most people do not understand how change is made.

The three things your goals need to succeed.

1.       It’s a process

It’s the work along the way. Focusing on the doing that underpins success. The saying pro’s stick to process is there for a reason.

Your goals are just the outcome of the process – the doing. Businesses that focus on what needs to be done are 43% more successful in achieving their goals.

2.       Investment

Giving people more work to do without allocating time and resources to do it is just giving them more work. Processes only work when they become regular habits.

Allocate specific time each day or week to work on the goals. And give people the tools to do the work.

3.       Accountability

Gym classes are popular for a reason. Most people lack the will power to make themselves exercise alone. Gym classes are delegated accountability.

Accountability works. Have someone review your progress. Ask the probing questions.

And above all be kind to yourself and your team. The key reason New Year’s resolutions fail is that when people slip up, as they will, they give up.

Yet true change comes from repeated effort. Knowing you will make mistakes, go off track, get distracted.

Just start again.

No baby learnt to walk straight away. It’s the same with your goals.

Claims can be successful – it’s up to you

Ninety % of all insurance claims are a bureaucratic tick 'n flick process.  But they are bureaucratic. If you don't have all your documentation in order at claim time, there will be hold-ups.

Your claim becomes like grit in a cog – swept away to the bottom of the pile – so that the machine keeps ticking.

"I've seen some simple claims, that should have been done and dusted in a week drag on for months. Simply because the correct paperwork wasn’t lodged at claim time."

It’s simple

Claim time is the moment of truth. Where the value of a good broker shines. Work with them, and it will be just a painless exercised in being paid.

1. The moment something happens, contact your broker immediately. They are the experts in the whole process and your advocate.

2. Answer all their questions and provide them with the documentation they require. Typically:

a. Full details of what’s being claimed for

b. Initial purchase invoices if available, or proof of ownership.  Photos can be helpful.

c. Estimated replacement costs.

d. Any lodgement notices with relevant statutory authorities, e.g. Police or WorkCover reports.

e. Bank account details for prompt payment.

Providing it doesn't need an assessor; it should all be straight forward and paid within two weeks.

Where it can go wrong #1

·       under insurance to save money

Insurance is an expense, with nothing to show for it except the promise that if things go wrong, the money will be there to put things right.

It's tempting to cut costs and self-insure. To carry that liability on your balance sheet and cover the cost yourself if things go wrong.

But it is always more expensive than you realise.

At the exit interview after a multimillion-dollar fire, the owner said

"whatever number you pick add 50%. There is always more stuff you accumulated, and replacement cost are always more than you want."

Where it can go wrong #2

·       not telling your broker everything

Quite simply, the insurance company can deny your claim if there are any material factors that they were unaware of.

And unless you are an insurance expert, you will not know what they deem to be necessary.

Tell you, broker, everything about your business and how it operates. Leave it up to them to decide what’s important.

And if there is something you want to hide, tell them anyway. There may well be a smart way around it. Or not.

But it is better than paying money for nothing. Which is what you will have if you have left things out.

Choose your broker wisely

They are an advisor focussed on managing the risk in your business: eliminating where possible, managing others risks and mitigating everything through the right insurance cover.

They are the GPs of business insurance and will access experts when needed. So, your risk is fully identified and managed.

They are your advocates when things go wrong.

Your first and most important tip-off is how much time they spend with you right at the beginning.

Does your broker truly want to understand your business? Or is it just another transaction.

How one tiny omission nearly cost Sandy her business

 There is no such thing as too much information for your broker

How one tiny omission nearly cost Sandy her business

“Jenna the Bangalow shop burnt down this morning …. I’ve lost everything….

Stock, fittings, the lot and there’s no way I will be able to re-open out of there anytime soon as I just found out the building owner is not insured”

“Sandy, relax… we’ve got your stock and fittings covered at $25,000…. and business interruption will cover your lost income until you have new premises.

“Jenna …… I had more than $50,000 of stock in there”

…. silence and a mumbled “f***”.

We’re not mind readers

Sandy Matthews started with her new broker in August 2019. As part of their process the broker undertook a deep discovery process.

But in answering the questions, she missed one crucial detail.

Her retail business operated out of two separate locations 22km apart, Mullumbimby and Bangalow. At the close of business every Friday afternoon, Sandy would move $30,000 of stock into Bangalow.  To take advantage of the weekend tourist trade.

However, she was only insured for static stock at each location, with fixed valuations. Not mobile stock and variable valuations.

She had not told her broker of the unusual practice of moving large values of stock between her stores on a weekly basis.

On the face of it, Sandy was under insured by around $30,000. Nor could she afford to write of $30,000.

Her business was at stake.

The devils in the details

At that point her broker would have been entitled to say bad luck. You didn’t tell us and so sorry we cannot help.

But there are those insurance brokers who have their customer’s best interests at the heart of what they do.

Jenna just rolled up her sleeves and got to work. Spending hours poring over every written line in all her business insurance policies. Searching for any potential additional clauses that could be leveraged into extended coverage for her.

Then more hours strategizing with colleagues about the best approach for submitting the claim. And finally, the real fun. Negotiating with the insurers on behalf of Sandy.

Eureka

It is important to have good coverage with good insurers. A policy with extended wordings and broad additional benefits may initially cost more but it can give your broker the wriggle room they need, to help you out when you most need it.

Through an extended endorsement, Sandy had a further stock benefit at other premises to the value of 20% of the total stock insured.

Within 4 days of the fire, the insurer had agreed to apply this extension.

Sandy’s business was safe. And for the first time in 4 days she was able to sleep more than a few hours.

Lessons

1.       Choose your broker with care. Listen to their questions.

a.       Are they being thorough?

b.       Do they explain everything? What you are covered for, and what you are not?

c.       Are they professionally qualified? And do they have you best interest at heart?

Because when the chips are down, will they be on your side, fighting for you.

2.       Tell them everything about your business, even stuff they don’t know to ask. It’s up to them to decide what is important. But it could be critical.

3.       Beware of cheap. It always means the insurer is leaving stuff out. Take advice and then decide.

* Name of the owner and exact location of business have been altered to ensure client confidentiality.

All business is local. How well known is yours?

All business is local. How well known is yours?

All businesses start locally, and even national businesses are just local businesses in multiple locations.

Ø  Coles & Woolies started out as small local family owned general merchandise shops. Today they account for 67.8 % of all supermarket sales in the country.

Yet 80% of their stores are less than 10 minutes’ drive from each other.

Ø  46 % of all Google searches are local. When you bear in mind that Google is used primarily as a reference source that is phenomenal. And 78% of local mobile searches result in an offline sale.

Ø  In fact, over 90% of all transactions involve a local buyer and a local seller.

So, as a small business owner in a local area are you maximising all the opportunity that is there?

How to grow your local brand and sales

1.       Get clarity about answering one question: Why would anyone buy from you?

The fundamental question and dig deep. What makes your business special / different? Why are people buying from you? What do they really want? E.g.  Books are adventure, knowledge, escapism. They are not bound pieces of paper with words in a cover.

2.       Develop a promotional offer

People are creatures of habit and getting them to change and try something new is hard. An offer that pulls on emotional drivers and gives a reason why they should trial your business. Give you a go.

 Then share it. Or promote it. But get it out there.

3.       Build your networking circles – work together

People do business with people. What local business environments do you participate in? BNI, Local Business Chamber and other business groups.

Link up with other associated businesses and work out how you can cross refer. And always ask competitors. We can’t do everything so maybe we are better at some stuff, our competitors at others and we could collaborate.

4.       Build your digital visibility

64% of local customers use search engines and online directories as their main way to find local businesses. Can they find yours? And make sure your website is digitally responsive.

Optimise your website for local search terms, make it visible through GMB and online directories. Target promotional offers to customers with GPS enabled mobiles walking nearby. Facebook can be used very effectively to sell, especially to customers. 

5.       Be Excellent

Word of mouth is a very powerful tool. And it can work both ways. So, take care of them and they will take care of you. Sharing the love, telling friends, referring you.

Who needs Professional Indemnity Insurance?

What is Professional Indemnity Insurance?

Professional Indemnity Insurance provides cover for potential threats such as alleged negligence or breach of duty arising from an act, error or omission in the performance of the professional services that you may provide. A Professional Indemnity policy provides protection for you and your assets against claims for financial loss, injury or damage to you and your business up to the sums insured in your policy schedule. The limits that you may need to consider range from $1,000,000 up to $20,000,000 in cover.

Engineer

Who should consider Professional Indemnity Insurance?

A Professional Indemnity policy is designed for anyone who gives advice and/or services of a skilful level, according to an established discipline, to another person or business.

Professions that may require this cover include

Advertising agency

How much do i need?

Choosing the appropriate professional indemnity insurance (PI) limit to purchase is not straightforward. There are several key factors that should be considered when deciding the limit that is right for your business. The selection of the most appropriate limit should be driven by your desire to protect your business and personal assets. All too often I see business owners purchase the minimum (PI) limit possible in order to satisfy their statutory or contractual obligations. Just because the limits have been set as a minimum requirement doesn’t necessarily mean you will not be out of pocket at the time of a claim.

Some of the key factors you may consider when reviewing or deciding your policy limit are:

Statutory Requirements

Many industries such as bookkeepers, certifiers and mortgage brokers are often subject to compulsory insurance limits to support a statutory registration or accreditation. These limits can vary between states and industries.

Project Values and Types

It is a common view that a high contract value requires a high limit of insurance and a low contract value has reduced professional negligence exposure. This factor should not be used as an independent measure however. Significant professional indemnity claims can result from a low value project.

Perceived Exposures

After the above points have been considered it is now time to assess the possible causes of loss, injury or damage that may give rise to a professional negligence claim.

Assessing the perceived exposure may be broken into the following 3 considerations:

 Financial loss

Monetary loss suffered by a third party as a result of an actual or alleged breach of professional duty. Example - Financial loss due to a delayed completion of a building contract due to an actual or alleged breach of professional duty by the project manager.

Property damage

The resultant damage to property could be a consequence of an actual or alleged breach of professional duty. Example – A support beam collapses in a building due to a design engineer under specifying the diameter of the beam. The collapse of the building has the potential for causing property damage to tenants of the building, neighbouring properties and public property.

Personal Injury (or Death)

Injury (or death) could result from an actual or alleged breach of professional duty of care. Example – Using the same example as above personal injury could occur due to the collapse.

A common misconception is that such risk is insured under a public liability policy. Public liability policies usually contain a specific exclusion in relation to claims arising from the provision of professional services therefore personal injury claims are a core professional indemnity exposure for many professionals.

Ability to retain risk

The extent to which you are prepared to expose your assets by either accepting higher excess or lower policy limits and your ability to control the risk or transfer liability to other parties involved should also be part of the assessment.

To the extent that any of the above content constitutes advice, it is general advice without reference to your needs or objectives and therefore cannot be relied upon. Before acting on the above information you should obtain advice specific to your needs.

Architect

Insurance - Why do people hate it?

When I landed my first insurance job 15 years ago I was so excited but, I have to be honest, I was a little embarrassed to tell people. After further investigation of why I was feeling like that, I realised – people hate insurance.

Most people I talk to think it’s too expensive, don’t like it, don’t really understand it and don’t see any benefit unless they suffer a financial loss.

I felt this deserved a bit more thought and I came up with my top 3 reasons.

Why people hate insurance – my 3 reasons

It is intangible and invisible

So when you purchase insurance cover you get your policy documents. You also get things like financial security and peace of mind but you cant see that. When you buy a new car, iphone, furniture or any other tangible item you get to be excited about your purchase. Driving around in your new car, sitting on your new couch and checking your new apps on your phone. How can an insurance policy compete with that level of excitement?

Insurance is complicated

Definitions, exclusions, endorsements, conditions – Why is there so much information to go through? What puts you to sleep more than reading through policy documents? Welcome to snoozeville. Then after navigating all of these documents you are still not confident you entirely understand.

Lack of trust in the insurance industry

People seem to believe that the insurance industry would do anything to get out of paying a claim. This view could be just paranoia or based on past bad experiences they may have had. Stemming from lack of service from an insurer or maybe from having a bad experience at claim time and feeling unfairly treated.

Lets turn this around – the positive news

In contrast to these points, I see the critical importance in having the correct insurance products in place and have seen many lives and businesses being able to bounce back from catastrophic events, large and small, because they have had the right insurances in place.

Also, out of the many insurance professionals I have met over the years I have found the majority to be hard working and honest, always doing what is in the best interest of their clients. Leaving the small minority to ruin the credibility of the industry.

You don’t buy insurance for fun or for self-actualisation. Insurance is purchased for financial protection and survival. The secret is to make sure you get the right help to make sure you know what to expect at the time of a claim. You can do this by consulting an insurance broker to work on your behalf so you can be sure you are being treated fairly.