How to reduce the business insurance cost

Business insurance is essential to provide long-term security, and is taken out from micro-businesses to large corporations.

Securing the company’s assets and property is a guarantee for the manager that his industry is not making mistakes.

The decision also strengthens the image of management because insurance companies tend to refuse services to companies that they believe do not meet their safety criteria.

It is common for different sectors to have different insurance costs, because each industry and company has its own particularities.

But this opens up a great deal of room for interpretation as to what are the most relevant risk factors to consider when insuring any asset.

These differences can change from one insurance company to another. This makes it indispensable for the company that wants to take out insurance to take extra precautions.

VIABILITY AND COST CRITERIA FOR INSURANCE CONTRACTING

Insurance companies consider several variables when setting the insurance price. Technical visits are made and the interested company’s documents are analyzed.

Practices taken by managers can either increase or reduce the final value of the insurance premium.

Factors valued by Insurance companies are the application of safety measures. Such as monitoring of risky components and maintenance given to the machinery used.

This happens because, for example, when taking out an insurance policy, experts analyze:

I – Sector, location, size and infrastructure of the enterprise;

II – Quantity and vulnerability of the critical points of an industry, plant, mill, etc;

III – Probability of something occurring that causes damage to the insured asset – an event commonly referred to as “claim”. These events include, for example, fire, flood, windstorms, falls, and theft.

IV – Capacity of the insured company to detect, act, and prevent problems from occurring. Even being able to prove the adequate training given to the employees on the plant floor.

Several practices can be implemented in an industry to be used as arguments when negotiating insurance premium discounts or asking for increased compensation. Positive factors, which help to reduce this value, are:

Monitoring of assets in critical points – vibration, temperature, pressure, leakage, etc; analysis of expenses with predictive, preventive, and corrective maintenance; renovation of machinery; team training; low level of danger in the sector and activities performed, both day to day and maintenance; assess the building conditions for this type of insurance and certifications with the competent authorities; be in accordance with NR-12; certification by own and/or independent experts, among several others.

DIFFICULTY IN INSPECTION

Especially for smaller clients or those with specific operations in certain industries, insurance companies may not be able to adequately value an asset, equipment, or structure.

This leads to industries being denied insurance claims because of the insurers’ lack of structure to certify with conviction whether or not a company follows safety standards and good maintenance practices.

And when it is not cancelled, the approval process can be delayed for months. That’s why insurers value it when the policyholder takes the initiative to monitor certain assets, speeding up the risk analysis process and reducing the risk of a claim.

For example, a Brazilian insurer states in its customer manual – without giving any justification in the text – that it does not insure transformers over 1,000kVA and motors over 1,000kW of power.

However, it makes an addendum, releasing the insurance “unless protected with thermal circuit breakers or fuses, and with preventive and predictive maintenance performed, duly proven by inspection.”

PREDICTIVE MAINTENANCE AS A GUARANTEE OF SAFETY

Implementing better predictive techniques is a win-win for the parties.

The insured can use the data record obtained, with temperature and vibration analyses, to claim benefits and discounts based on the company’s good practices.

You can demonstrate that your critical assets are trouble-free. And, when anomalies do arise, the maintenance team is quick to act.

This reduces the chances of a claim occurring and characterizes the organization as a “good” insured, worth having as a customer. In other words, when it comes time to take out or renew business insurance, predictive maintenance history is the company’s certificate.

Insurers, on the other hand, have greater assurance of the insured’s compliance with good maintenance practices.

A good customer generates more confidence to grant a policy to an industry, even if it operates in a high-risk sector.

And experts from the credit rating agency A. M. Best, which specializes in insurance companies, also agree with this statement.

In its April 2018 report, A. M. Best was dedicated to talking exclusively about the advantages of predictive analytics for the insurance industry.

It states that “The increased use of data and [predictive] analytics has led to better information to aid risk selection – when and where to increase or decrease [participation in an industry].”

In other words, predictive techniques can indicate, for example, if a treadmill tends to cause more problems than similar ones from other brands, or how the same motor behaves when applied to different sectors.

This is done by cross-referencing the prospect’s information with your own database. This speeds up the decision process and reliability in approving or rejecting potential policyholders.

REMOTE MONITORING

There are affordable solutions to perform remote data collection from different critical points for further analysis and diagnosis.

It’s possible to answer monitoring demands through insurance companies while ir reduces costs with corrective and preventive maintenance.

Without the need for large investments, increasing productivity, or even optimizing the maintenance team’s work.

Dynamox develops the solution: a device accompanied by an application for smartphones and web platform. Its function is to monitor the vibration and temperature of the machinery.

With the solution it’s possible to, via Bluetooth connection, access historical data, perform spectral analysis, and effectively know, from a distance, the condition and health of your assets.

It brings more control and security to your plant, with data to support better decision making.