Choose an insurance adviser for your business
As a business owner and/or employer you will use two types of insurance adviser. You will need to identify the type of insurance you need so that you can find a suitable broker for your business. See which type of insurance adviser do you need?
General and commercial risk insurances are dealt with by an insurance intermediary, sometimes referred to as an insurance broker. An insurance intermediary deals with a number of insurance companies and may be able to secure a better deal for you.
Life assurance, protection and health insurance are dealt with by independent financial advisers (IFAs).
Insurance brokers and IFAs act as intermediaries between you and an insurance company.
This guide explains the issues involved in choosing both types of adviser and what to do when presenting your insurance risk details.
Which type of insurance adviser do you need?
Which type of insurance broker you need, where to get further advice and how to act in good faith and declare risks
To decide which type of insurance adviser you need you should identify the risks to your business.
You should consult:
- An independent financial adviser (IFA) for people-related risks and business-planning issues, such as life assurance, protection, health and business continuity. IFAs also deal with pensions and investments - see know your legal obligations on pensions and pension planning for business owners.
- An insurance broker for general and commercial risks, such as motor insurance and employers' liability insurance.
Some insurance organisations offer both IFA and broker services but if your adviser does not deal with a particular type of insurance they should be able to direct you to an alternative provider. See how to choose an independent financial adviser.
Insurance brokers, advisers and other insurance intermediaries are regulated by the Financial Conduct Authority (FCA) and you should make sure that your adviser has FCA authorisation. Check that an insurance broker is regulated by the FCA.
Always be honest
Honesty is essential in all dealings with insurers. Providing incomplete information or withholding something that is relevant can invalidate a claim, contract and policy. Relevant information is a broadly defined term and if you have any doubt at all regarding the relevance of information you should declare it.
Your adviser can assist in deciding the relevance of information submitted to the insurance company.
How premiums are calculated
Your premiums will be calculated based on the information you give and the history of similar business types.
Your premiums can be affected by the claims you have previously made and by the levels of risk attached to people in your employment or to your business and assets.
Minimise your insurance risks and costs
There are a number of measures you can take to minimise your risks and keep your costs low, including effective health and safety, security and building protection.
Managing risks in your workplace can make it easier to obtain insurance, but it also makes good business sense. It can reduce costs that insurance does not cover including your insurance excess and the cost of replacing staff, sick pay, bad publicity, inconvenience and fines.
You should have effective health and safety policies and procedures in place to help ensure a safe working environment. See Health and Safety Executive for Northern Ireland (HSENI) guidance on risk assessments.
You can minimise other business risks by:
- ensuring that equipment and machinery is safe and in good repair
- ensuring you have all the necessary quality certification and licences
- using environmentally friendly and non-hazardous materials and equipment
- Training staff to follow correct health and safety procedures
Your previous insurance claims record may in part determine the size of the premiums you pay. In other words, if you have submitted a claim or claims in the past this may be reflected in the size of the premium the insurance company quotes.
It is essential to keep detailed records of accidents, risk assessments and equipment purchases, as insurance companies require documentary evidence if you do submit a claim. The clearer your records, the more likely it is that your claim will be accepted without difficulty.
Presenting your insurance risk details
A comprehensive health and safety risk assessment is the first step to compiling a presentation of your risks.
You can conduct assessments for other types of risk, such as fire and security - which could include premises, vehicles, workers and IT. See insurance: business property and assets.
Assess your risks
With the assistance of your insurance broker you should carefully assess your insurance requirements and compile a thorough report of the condition of your business - see health and safety risk assessment.
A good presentation of your risk details with all the required information and evidence of good practices will help the insurance company to make the right decision about how much of a risk your business is and how much premium to charge.
Your broker should also identify whether you will need to take out specialist insurance for your type of business. There are many types of commercial insurance you may wish to consider. For more information, see identify potential business risks and insure against them.
Minimise your risks
You are more likely to get cover if you can demonstrate that your business takes safety seriously, with detailed risk-assessment records and comprehensive training practices.
This is especially important for high-risk businesses, such as those that undertake more dangerous activities such as working at height or with dangerous substances.
How to choose an insurance broker
Most business owners prefer to use an insurance broker for general and commercial insurance. To get the best value and most appropriate insurance to protect your business your choice of broker is important.
An insurance broker will help identify and present your risks, suggest improvements for business continuity, obtain quotes from insurance companies and assist you in making claims.
Many insurance brokers are agents of an insurance company and may not be able to offer advice in the event of a claim.
Ask questions to ensure the broker will be able to support your business, such as:
- Will they provide help and support when you make a claim?
- Can they find the most appropriate cover for your business needs?
- What experience do they have in your business sector?
- Do they understand the risks that your type of business faces?
- What recommendations or references can they offer that show they can help you?
Many insurance brokers offer a general service but some also provide specialist advice on particular business areas such as marine and aviation insurance.
Your business could have specialised risks such as working with hazardous substances. Some industries have trade insurance schemes, agreed with an insurer and tailored to the needs of that industry.
Some brokers charge a fee for their services, but most obtain a payment from the insurance company they recommend to you if you take out insurance with that company.
How to choose an independent financial adviser
Many businesses use independent financial advisers (IFAs) to obtain insurance for people-related risks.
Most IFAs deal with life assurance, protection, pensions, medical and permanent health insurance. They will also help with identifying risks and in financial planning.
Some IFAs also provide a business service covering such areas as employers' and public liability.
You need to be sure that your IFA is able to cope with your business needs. Questions you might ask when choosing an IFA include:
- Do they have expertise in your required areas - pensions, investments, mortgages, etc?
- Can they offer any recommendations and references?
- What is the extent of ongoing support and advice after you have obtained insurance?
- How is the IFA remunerated?
You may find that you use an IFA for some areas of your insurance and then go to a specialist insurance broker for more specific problems.
An IFA will either charge a fee for their services or obtain a payment from the insurance company they recommend to you if you take out insurance with that company.
The conduct of IFAs is strictly regulated by the Financial Conduct Authority (FCA). Read about regulated financial services with the FCA.
Choosing an insurance adviser: advice and support
There are organisations that can help and advise you when you are going through the process of looking for an insurance adviser.
Your Local Enterprise Agency should be able to advise you when selecting a broker or an independent financial adviser.
The British Insurance Brokers' Association (BIBA) could also help you find a broker.
If you choose to deal directly with an insurer, it's worthwhile checking that they are a member of the Association of British Insurers (ABI). Check that an insurer is a member of the ABI.
Other ways to get help when choosing an insurance adviser include personal recommendations and newspaper, directory or online searches.
How to manage the relationship with your insurance adviser
It's best to establish clear parameters in your relationship with your insurance adviser. You should be clear about what your adviser can, and cannot, do for you. Discuss what you require for your business and make sure they are prepared to offer this level of service.
If you're using a broker, depending on their status, they may also receive payments from the insurance company they represent, as well as taking fees from you as the insured. If your broker represents an insurance company you should seek details of whether such payments are made and their value.
When to get in touch
Your needs will define the level and frequency of contact with the adviser. You will probably see them often in the early stages of the relationship, but once your insurance needs have been met contact will become less frequent.
Circumstances can change, eg if your business expands or contracts, and this may alter your insurance requirements. You should always keep your adviser informed of changes to the business as this may affect or even invalidate your policies.
Review your needs
It is sensible to review performance and cost regularly. There is no shortage of advisers and, however friendly your current adviser may be, you should consider switching if you are not getting value for money. Equally, there is little incentive for change if you are satisfied with the quality of service and cost.
For general insurances, which are usually renewed annually, it's always a good idea to get a few comparative quotes at renewal time. You should start the renewal process as early as possible. You may ask your broker to do so, as the insurance market is competitive and brokers normally compete for business.
For investments and pensions it is sensible to ask your independent financial adviser to conduct periodic performance reviews and to check that the original assumptions, eg retirement age or market performance, are still valid or appropriate.
Problems with your insurance adviser
The Financial Ombudsman Service (FOS) is an independent service set up to help settle individual disputes between consumers and financial companies. The service is confidential and free to consumers, but you must complain to the company first before the FOS can look at your case. If you are unable to resolve your grievance with the company directly, then you should seek advice from the FOS.
You do not have to accept any decision the FOS makes but if you do accept an ombudsman's decision, it is binding on both you and the company.
The Financial Conduct Authority (FCA) is an independent body that regulates the financial services industry in the UK, including insurance. Read further guidance on how to make a complaint to the FCA.