What does the global reinsurance landscape mean for your business

In its simplest terms, reinsurance is insurance for insurance companies. 

Unfortunately, the global reinsurance landscape is impacting Kiwi businesses of all sizes following an increase in catastrophic events.

Insurers have paid out more than $3.18 billion over 107,569 claims from the Auckland Anniversary and Cyclone Gabrielle climate disasters alone.  

This amount already exceeds the total claims for 2022 ($3.08 billion), which was a record year in itself. There are also increasing costs for repairing properties and rising claims costs and inflation.  

Now the cost of reinsurance is climbing too. The rising costs have even seen some global reinsurance pull out of covering some insurers' environmental risks.

It means some insurers have taken on the risk themselves instead of paying higher reinsurance costs.

So, what does this mean for small businesses?

“A disaster is one of the most stressful events you can go through as a small business owner and a good broker can help ease that”

What does rising reinsurance mean for your business?

Here are some likely effects of the global reinsurance landscape on your business. 

Higher premiums

As reinsurance becomes more expensive and difficult to get, insurers may have to increase premiums for their policies. Unfortunately, many small businesses may face increased premiums as a result. 

More information required

Insurers will likely ask for more information about a business's risks and plans during renewal and when a claim is lodged. You may be asked more questions and spend more time reviewing the coverage they will offer. These questions and requirements may feel daunting when you're time-poor, but you still want to ensure you have the right cover without breaking the bank. 

Cover restrictions

Insurers may impose coverage restrictions or larger exclusions. Some insurers may even decline to reinsure a business if they feel the risks are too great in this present climate. These impacts may make it more difficult to decide how and who insures them and the cost of ensuring they're properly covered if a disaster strikes. 

How can you make sure you have the right insurance cover? 

An insurance broker can provide expert advice and ensure you get the right cover for your business needs. 

Experienced brokers have strong relationships with various insurers and can help businesses get the right cover at the right price. Their advice means you don’t have to guess what will work with you and hope for the best.

Brokers can also help review a business' existing policies and procedures and suggest ways to potentially reduce your insurance costs. This could include adjusting a business' claims excess or suggesting ways to reduce risk, which insurers can look at more favourably.

If you have to make a claim, brokers can also help you with the claims process, which can be difficult to navigate. This help is especially important following a major disaster when insurers are inundated with claims and outcomes take longer. 

A disaster is one of the most stressful events you can go through as a small business owner and a good broker can help ease that.

Do you have the right cover?

Reducing your insurance costs with rising costs can be tempting, but it's a trap you should avoid. It's a more important time than ever to focus on the right protection.

Speak with a broker today about your needs and whether you have the right cover. 

Important - Steadfast NZ Limited, its related companies and associates 

This article provides information rather than financial advice. The content of this article, including any information contained in it, has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the information, taking these matters into account, and seek appropriate financial advice before you act on any information.