Welcome to the quarterly MartinMinett newsletter for clients and industry contacts. Season’s Greetings to you all and thank you to all the Brokers and Clients that have given us the opportunity to assist you with Business Insurance claims and other matters.

1. News and Current industry issues – across insurance and risk management.
2. Short & Sharp – the Importance of Adequate AICW cover for Brokers and Business.
3. MMCP profile – A brief profile of the MartinMinett Directors.

1) News & Current Industry Issues
WHY IS THERE EVIDENCE OF A GROWING TREND FOR BUSINESSES TO LOOK TO PUT TOGETHER THEIR OWN COMPANY INSURANCE PROGRAMME WITHOUT A BROKER?

We have been asked to present to hundreds of Brokers this year on Business Insurance (ISR, Buspack and All Risk policies). In particular, we have been asked to explain business Interruption Insurance using a practical focus so that Brokers could discuss even more real life scenarios and examples of the importance of Business Interruption Insurance. We have been asked to highlight, in this training, examples where the right Business Interruption Insurance put together by a Broker has enabled companies to survive a major claim event that otherwise could have been catastrophic for their business. We have been able to contrast that with examples where businesses have organized business insurance directly and at claims time been unpleasantly surprised that they are not insured as best they could have been – and the dollar cost at claim time compared to the relatively small dollars saved by organizing their business insurance directly.

With that in mind, we note that the Vero survey of over 800 Australian business surprisingly showed that only 75% of businesses with 20-200 employees used an Insurance Broker. This was down 12% compared to one year ago, when 87% of these businesses had an insurance broker. These statistics prompt the question:

“Why are 1 in 4 Australian businesses with 20-200 employees NOT using an Insurance Broker?“

The usual reason suggested is generational change and the internet. Statistics tell us that younger buyers, and Gen Y buyers in particular, are more likely to use the Internet to buy directly. This simple explanation needs to be considered with the reality of how many decision makers on the purchase of business insurance for companies with 20-200 employees fall into these categories - 93% of all survey respondents were over 30 (i.e. 93% - including companies with < 20 employees & companies with 20-200 employees).

There were other reasons quoted for clients leaving brokers. 1 in 3 business decision makers stated the reason they left their broker was that they either:

1. couldn’t see the benefit they were receiving from having a broker (understanding),
2. their broker didn’t understand their business (perception) or
3. their broker was unresponsive (service).

These are not “generational change” reasons. These are “old school” reasons where the business decision maker has not felt or understood that the true value of a good broker is the “sleep easy” feeling that you have the right cover which is proven at claim time not at time of purchase.

As the CEO of a major Australian Insurance company recently noted, about the value-add provided by brokers:

“Even when you get to very simple – or simple looking - businesses, the risk can be quire complex and people need advice as to the coverage they need and the amount of cover they need to buy . . .” He further noted brokers can also prove their worth in the event of a claim.

Brokers have told us that they see a great opportunity in the statistic that 1 in 4 Australian businesses, with 20-200 employees, do NOT use an Insurance Broker. Many brokers have told us they have found real value in discussing, with clients and potential clients, real-life examples where brokers’ expertise in advising on the right business insurance has meant companies have survived major claims events. Ultimately this has assisted them in selling the right Business Insurance to clients. Importantly, it has also assisted clients’ to better understand the benefit of having a good insurance broker who is a trusted adviser.

We hope in 2014 that those 1 in 4 broker-less Australian businesses, with 20-200 employees, can come to a better understanding of the benefits that a good insurance broker can bring to their business. Hopefully it doesn’t require a major claims event to enable that realization.

2) Short & Sharp - A Takeaway for Brokers & Business Owners
THE IMPORTANCE OF ADDITIONAL INCREASED COST OF WORKING (AICW) COVER

Whether or not a business has gone to the expense of preparing a formal Business Continuity Plan, the importance of mitigating any loss situation is well understood by all good businesses. Such formal or informal plans are essential and can be the difference between a business surviving a major interruption or not. From an Insurance viewpoint any plan should include the business having adequate Additional Increase Cost of Working (AICW).

AICW provides insurance cover that, following an insured loss, can:

1. meet urgent cash-flow needs,
2. assist recovery of the business and
3. protect the insured’s client base.

It is common to see AICW sub-limits in excess of $100,000 on Buspack policies and even larger AICW sub-limits for businesses on ISR policies (e.g. AICW cover of well over $1m). AICW protects clients for the reasonable and necessary additional costs incurred following insured damage and can be vital in assisting the business to recover as quickly as possible.

Brokers should obtain as much AICW cover as appropriate for their client and that underwriters will provide. AICW provides great benefit to the full recovery of a business that has suffered insured damage. The importance of adequate AICW cover cannot be stressed enough.

AICW provides better business insurance cover to help clients (and brokers) to “sleep easy”.

3) A brief Profile of the MartinMinett Directors
ROB MARTIN & PAUL MINETT

Rob Martin has gained a wide range of experience over 20 years in insurance accounting and insurance operations within the industry. In that time, Rob has worked as an external auditor of Insurance companies, in internal management for Insurance companies and was a Partner and Director for 5 years at MSM Loss Management specialising in business interruption insurance. In particular, Rob has experience in preparing claims with technical, legal and detailed insurance and accounting issues as well as the ability to negotiate favourable outcomes for business claimants.

Paul Minett has dealt with Insurance issues for companies both in internal management and as an external consultant over the last 25 years. Firstly, as a Financial Controller and then in the last 14 years as an Economic Loss Expert, Paul has used both his technical and modelling skills on detailed projects for clients to ensure they achieved the best outcome. For 12 years, Paul was with MSM Loss Management and for 5 years was a Partner and Director. Paul has specialist experience in preparing and settling claims in all business sectors and in particular for retail, food and beverage, logistics and mining and metal processing industries.

Over the last decade, Rob and Paul have managed the preparation, lodgement and the resolution of insurance claims for a diverse range of clients ranging from multinational companies through to middle market businesses. They have also liaised with senior counsel and solicitors and compiled expert reports on quantum of loss claims for mediation and litigation matters.

4) MartinMinett Claims Services
OUR SERVICES - Claims Preparation

MartinMinett Claims Prep assists brokers and their business clients to prepare material damage and business interruption claims. Its principals, Rob Martin and Paul Minett, have assisted many clients to ensure they receive the full claim entitlement from their insurance policy. MartinMinett Claims Prep helps to minimise disruption and works to save time and money for the client and the broker.

Generally claim preparation costs are covered under the business client's policy and therefore at no cost to your client they receive a financial and service benefit. In addition the broker saves time and cost while still keeping control of the claim process by using the services of MartinMinett Claims Prep. A real win/win/win scenario.

MERRY CHRISTMAS AND THANKS
FOR YOUR SUPPORT

A special thank you to all the Brokers and Clients that have given us the opportunity to assist them with Business Insurance claims, training and pre-loss work in.

We appreciate your support this year, as well as in previous years. We look forward to working with you again in 2014.

Merry Christmas and Best Wishes for a Happy and Prosperous New Year!