Insurance: you have more choice than you think!

By Andrew Stott

Head of Corporate

3D Global Insurance Agency Ltd

 

When conducting insurance business at 3D Global, one of the most common discoveries we make when visiting businesses or individual clients is that their insurance does not match their risk. In insurance terms, they are “under-insured”.

More often than not, since there are so many areas these days in which insurance is required, the cause of this under-insurance is a lack of understanding rather than a lack of funds.

For example, a company might have the same insurance for its executive on CYP 100,000 per year as the new employee on CYP 6,000 per year.

An executive on CYP 100,000 per year will be a greater loss to the company if he or she gets sick than an employee on just CYP 6,000 per year, assuming of course that you have your pay incentives right.

“Key man” insurance can reflect the potential loss to the company of the executive falling ill. For example, you might want to take out an insurance that will pay his salary after the first six months.

More seriously, many companies are under-insured for liability. Imagine that your 100k-a-year executive tripped on a pile of papers that were being ‘stored’ on the fire escape and fell through a window. His injuries meant that he could never work again. Your storage of papers on the fire escape breached fire regulations; your non shatter-proof windows breached EU safety regulations. He sues you for damages and his claim includes the next 30 years he has lost in income.

If your liability insurance is only CYP 5,000 (and we know of cases where it really is that low), then your company is in big trouble.

Another common form of under-insurance is with business premises. If the building burns down, often the insurance is not enough to allow you to rebuild, and the business never re-opens.

 

You do have a choice

 

One of the key reasons why people and businesses do not examine their insurance policies is that they do not realise that they have a choice.

They take out a car loan with a bank and they think that they are obliged to take out the car insurance with the bank too.

This explains why 50% of insurance business in Cyprus is still done through the banks. But the EU freedom of competition rules means that banks can no longer insist that you take out the insurance with their partners too. You have a choice.

The same applies to the broader corporate world, where even in Cyprus, with strong social networks, we hear of cases where board members are breaking taboos and going for the insurance that best suits their business, rather than automatically choosing the company of their friend on the board.

People are beginning to realise that they have a choice.

 

Do you understand your policy?

 

But having a choice is not much help if you are not an insurance expert who can understand the range of policies on offer. This is where our 30 years’ experience comes into play.

For example, one obstacle to getting the best deal is that many individuals and businesses do not understand the policies that they already have. In simple terms, they do not know what is or is not insured and how much it is insured for.

For international companies, this is often because policies are written in Greek and local insurance companies have not made an effort to translate them. 

But even when the policies are in your own language, the technical jargon means that the real meaning is still obscure.

As insurance experts we spend a lot of time at 3D Global with clients, helping them to understand the policy that they do have. And because we are not tied to any individual insurance company, we can offer alternatives and help clients decide which policies best suit them.

 

More competition means better service

 

The insurance business is fundamentally a service business, because as far as costs are concerned, at the end of the day you get what you pay for.

The important part of the insurance offering is the service. For us, this includes not only offering a range of insurance alternatives but also extending other forms of service, for example helping busy people with time-management issues.

If I can help a Chief Financial Officer manage his 15 insurance policies so that he has to look at renewals just once per year instead of 10 times, then I have done him a valuable service.

This is why greater competition is a good thing for customers. The more choice people have, the harder insurance companies and agents like us have to work to keep you.

 

3D Global is regulated by the Cyprus Superintendent of Insurance and licensed to market general and life insurance policies in Cyprus.

www.3dglobal.com