clause and effects – getting the right insurance cover
TRANSCRIPT
Vet TimesThe website for the veterinary professionhttps://www.vettimes.co.uk
Clause and effects – getting the right insurance cover
Author : ADAM BERNSTEIN
Categories : Business
Date : August 1, 2013
• Since the days of Daniel Defoe, people have lamented that there were only two certainties inlife – death and taxes. To those, you can add insurance policies, as no practice would operatewithout being fully covered. But how do you get the best cover?
NO ONE LIKES bills. Even less so for something that is a little intangible and only ever useful inthe event of accident or disaster. But bills for insurance shouldn’t be avoided as, even with theattendant cost, insurance is far less expensive than not being insured in the event of a loss.
The bigger problem is that too few people are switched on to the art of making in veterinaryinsurance specialist, PPSGI, part of the Professional Practice Services Group, says it’s importantpractice owners understand “the market remains incredibly competitive and, at times, thepremiums quoted are in no way reflective of the risk insured”. She says this serves to furtherdistort the market at renewal and does not give the insurance profession credibility, particularlywhere additional incentives are offered alongside the policy. Her recommendation is to alwaysbenchmark renewal quotes.
Nathan Scott, an account executive at J A Duffy and K L Barrett, an NFU Mutual representative,agrees with Laura, stating: “Insurance markets are always price-competitive, particularly whereonline insurers are concerned, but price ought not to be the primary consideration.” He firmlybelieves the question ought to be “am I adequately covered?” The most reputable insurers maynot be the cheapest, but the cover they offer is likely to be the most comprehensive and policylimitations the least restrictive.
Reducing premiums
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With insurance, of course, the devil is in the detail, and often very fine print. This is where theadvice of a good broker will prove invaluable in searching the market for the right policy and withhelp in getting down premiums. The first step should be to diary the renewal date to allow plenty oftime to seek new quotes.
Once the renewal arrives the quotation should be compared to the previous year’s price. If it’srisen, the insurer (broker) should be asked why. Where claims have been made, practices shouldseek the final settlement figures from the insurer, as this will be useful for negotiating with a newinsurer if the final tally can be demonstrated. The premium breakdown should be analysed. Theremay be elements, perhaps administrative fees, that have been added and these may benegotiable. It may be that elements are unnecessary or are covered by another policy elsewhere.But if there has been an increase, it is always worth asking if the premium can be reduced toreward loyalty.
According to Laura, premiums can be reduced in a number of ways. “Effective risk managementthroughout the practice is important and this will reduce the instances of claims and also protect thevaluable asset of your staff,” she states, adding that it’s worth seeking out any discounts availableto practices by virtue of membership of associations such as BSAVA, VPMA or the veterinarybuying groups. Practices may be able to reduce premiums by increasing the excess and usinginsurance for only the more severe claims.
Both Laura and Nathan agree an additional discount may also be available by a long-termundertaking. “This benefits the practice in two ways, firstly you can receive a discount for thecommitment and secondly, it ensures the underlying rating cannot be increased, subject to thelevel of claims during the period,” explains Laura, while Nathan suggests the policy excess isanother thing clients often overlook. “Customers should be smarter here – it shouldn’t be so highthat covering small losses becomes too expensive for practices,” he stresses.
Getting the correct cover
It is often only discovered after the event, when it’s too late, that businesses are eitherunderinsured or incorrectly insured. This concerns Nathan. “One absolute must is to be correctlyinsured. Deliberately underinsuring is most definitely not a prudent way to attempt to lowerpremiums and could leave you without adequate or, for that matter, any cover in the event of aclaim,” he warns.
Laura points out: “We find many practices carry what is known as an office insurance policy andfind that cover is deficient in many areas.” She also notes risks that may not be catered forcorrectly under a general policy include veterinary refrigerated drugs, or equipment used away fromthe practice. She also considers “accurate business interruption cover – based on the correctgross fees calculation – is also vitally important.” Nathan echoes her comments, saying that apartfrom the obvious insurances, “an equally important insurance, and one just as likely to be claimed
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against, would be bailment (covers animals in the practice’s custody and control)”.
He also considers business interruption to be a “musthave” policy and adds legal expenses andpersonal accident to that essential list. For this reason, it is sensible to look at package policies thatbundle a selection of relevant covers pertinent to practices into one policy.
Indeed, Nathan says: “Packaged policies designed specifically for veterinary practices will alwaysbe most cost-effective, largely because liability cover is offered at a flat premium, rather than beingcalculated from actual turnover and wages figures, assuming the risk falls within upperlimits – usually relating to turnover, value of any buildings and number of employees.”
Legal expenses insurance can be overlooked. It can assist with employment issues and so is veryuseful. It can often mean practices can reduce costs where they are purchasing this separately.When invoking legal expenses cover, Laura recommends practices should always seek the adviceof the (insurer’s) helpline before taking any action with an employee and on receipt of anynotification of a grievance, otherwise the insurer may not indemnify them.
There will always be conditions attached to each section of a policy and she recommends vetsshould read their documentation thoroughly to ensure they comply. All insurers have a minimumstandard of security on premises they insure, and this should always be checked for compliance.Also, insurers normally require notification of a claim within a required timescale in the event of aclaim – usually 30 days. Laura adds: “Practices should pay their premium direct to their insurer– often available by interest-free instalments – and not to the broker.” This will ensure they are fullyaware of how much the insurance company is asking for the cover.
Use an established broker
Clearly, you get what you pay for with insurance cover, and it’s worth investing in a personalisedservice. Laura believes practices should think hard before buying their policy from a high streetbroker or online, “due to the nature of their business and the specialism required in veterinaryinsurance”. Being “caught out” should not be an issue, reckons Nathan. “Use a reputable brokeror agent with whom a face-to-face meeting has taken place and who has taken the time to explainand clarify all the terms and conditions, as well as, perhaps more importantly, confirm what is notcovered,” he advises.
The value of a good broker, says Laura, may only become apparent when a claim is made. “It iscrucial to have access to support staff experienced in veterinary matters who understand thenature of the claim and can provide the relevant information immediately,” she says. “You cannotover-emphasise how important it is to effect the correct cover with regular reviews by your broker toensure you are fully protecting your livelihood,” she states. Telephone-based sales organisations,she claims, frequently fail on this fundamental aspect of surgery insurance. Practices shouldremember that while price is important, a cheap insurance quote isn’t always the best. Ultimately,
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what they need, of course, is a policy that will pay out when a claim is made.
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PPSGI partner Laura Marsh says: “The market remains incredibly competitive and, at times,the premiums quoted are in no way reflective of the risk insured.”
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“Deliberately underinsuring is most definitely not a prudent way to attempt to lowerpremiums and could leave you without adequate or, for that matter, any cover in the eventof a claim,” warns Nathan Scott.
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