I work in the insurance profession and feel extremely proud and privileged to do so. Insurance being one of the most important industries to any developed or developing economy. In fact you cannot have a fully developed economy unless you have a non-corrupt insurance industry upon which business and home owners can trust to deliver genuine protection when their assets are lost, or damaged, their personal or business income is disrupted or they are being held legally liable for some negligent act or omission.
While many treat insurance as a necessary evil or worse still a cost, I believe that for a business owner it is the most important contract that they ever enter into. Why because it can protect their life’s work, the assets that they have accumulated in the business and the lifestyle they gain from the business. How many business owners sacrifice today’s lifestyle for themselves and their families for their business. It also protects the livelihood of their employees.
Let us take a SME business owner for a minute. Their business is often their sole source of income. Sometimes for their spouse, children and/or parents as well. It is the single biggest asset, the mortgage over their home and their superannuation. It is no understatement to say that a lot is at stake when it comes to ensuring that all this is properly protected. This is the key to understanding insurance. It is not just a cost but protection.
The premium paid for insurance is clearly not the total cost of risk. The total cost of risk does include premium but it also includes fees and commissions, the cost of risk evaluation, risk protection (alarms, bars, fire protection) policy deductibles (excesses) self-insured and uninsured losses and losses not paid due to under insurance. These last few costs sit as a giant contingency liability over most SME companies.
At the same time, insurance is one of the most complex products in the world to understand.
For over 40 years I have been working to help home and business owners recover from major insured losses, weather events, fires, earthquakes and the like. So many times the lack of adequate insurance has led to huge financial ruin for the business owners. It often has a far wider social effect with the owners no longer able to afford to send their children to private schools or university, while the business or home owner find themselves in a cycle of poverty they simply cannot break out of.
I have developed this blog to raise some of the issues that I confront on a day to day basis in that the hope that lessons learnt by me in claims will assist others to avoid the same mistake.
I do not intend to sugar coat my thoughts. If something is good I will say so. As an industry we could certainly do with some positive feedback of late. If something is not so good, I will highlight it in the hope that it will get people of influence to think about the ramifications of our industries approach to an issue and that at the end of the day, while we owe a duty to our shareholders we owe an equal duty to our customers, to our communities and to the overall good of our economy.
The views I offer are mine and mine along and may not be shared by my colleagues at LMI Group.
If you disagree or support some point or issue I raise please use the comments section to have your say.
Please note that what I discuss in this blog covers a wide area of the law and insurance practice and many of the subjects touched on are the subject of volumes of texts in their own right.
Having said this, if you believe it adds value please let your friends and colleagues know about the blog.
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