How property owners can manage risk to present a positive profile to insurers

This year’s UK Business Risk Report found respondents expressing real concerns about the risks facing their properties – with security and climate risks very much at the forefront.

In fact, almost two-thirds of businesses (63%) are worried about at least one property risk. Security risks (30%) were amongst the most common, followed by the impact of extreme weather, which was a concern for a fifth (18%) of businesses.¹

In the context of a cost-of-doing business crisis,² it’s easy to understand why those risks, and the disruption that can follow if the worst should happen, are concerning. However, despite the real risks, not many businesses are taking action. Essentially, while 63% of businesses are concerned about property risk, only 14% plan to invest in property risk management.¹

Meanwhile, businesses are also concerned about their property insurance arrangements. The rising cost of building materials, which can affect the level of property insurance required, is a worry for 18% of businesses. Underinsurance itself is a key issue for 9% of UK firms.¹

With many businesses facing real financial pressure this winter,² some may be tempted to reduce the level of property insurance they buy. This could leave them underinsured and at greater threat from security and weather risks.

So, what can businesses do to reduce these risks? How can businesses present a more attractive proposition to insurers? How can they manage their insurance premiums without leaving themselves exposed?

Weather the winter storms

Unfortunately no-one can control the weather, but businesses can take steps to prevent weather based incidents affecting their property and premises. In fact, with the UK experiencing more extreme weather, this area of risk management is more important than ever.³

Flooding is most likely to be the main, if not one of the main, weather risks facing businesses. What’s more, the cost of a flooding incident can be very high. The average cost of flood damage is around £82,000. Businesses can lose up to 50 working days when they experience flooding – in turn leading to a loss of custom and reputational damage.³

As with any risk, preparation is vital to avoiding the worst, so think about taking steps such as:³

• Signing up for alerts from the Environment Agency, National Resources Wales or the Scottish Environment Protection Agency to receive timely flood warning messages.
• Conducting a thorough risk assessment of the premises to identify potential at-risk areas. For any risks identified, devise and put in place an appropriate solution.
• Installing non-return valves on drains as well as inlet and outlet water pipes.
• Developing a flood contingency plan with your suppliers and clients – which should include:
  • Important contact information.
  • A map showing locations of supplies, protective materials and shut-off points
  • An outline of steps to take in order to protect employees, property, ensure health and safety, minimise business disruptions and facilitate recovery.
  • Checklists for staff to use during a flood.

Secure your property

For most business owners and managers, the steps to securing property are well-known. However, it’s always worth revisiting the basics to ensure security arrangements remain up to date, and to check that you’re not overlooking crucial steps.

The right security arrangements depend on the nature of your business, its location and a range of other factors. However, there are a few things every business should consider, including:⁴

• Review site perimeter lighting: Lighting is the first line of defence because a well-lit site is less attractive to thieves, making them more visible. This hampers any attempts to ‘case’ a property – so check your perimeter and entrances are well-lit.
• Know who is on the premises: Controlling access to your premises makes it harder for criminals to enter. Some criminals disguise themselves as delivery workers, so consider identity lanyards for all your employees and an entry control system at all entry points.
• Establish lock up procedures: Make sure your staff are aware of a clear protocol for locking up your premises. For example, you could issue a checklist of potential entry points to be checked before the building or site can be considered secure.
• Deter criminals with clear signage: Using signage to highlight your security system can put off criminals who will always prefer ‘easier’ targets.
• Use a CCTV monitoring solution: Again, CCTV at entry points can be a real deterrent for potential thieves, so consider installing a suitable system for your premises – ideally covering all entry points and the perimeter of your site.

Beware of underinsurance

There is another risk facing commercial property, which is being driven by inflation and the rising cost of building materials.

Recent research has found that 80% of UK properties are underinsured. Around 587,000 high net worth homes and commercial properties with a total value of £340 billion do not have adequate buildings insurance.⁵ That insurance gap could see claims denied or payments reduced in the event of an incident, so it’s something all property owners should take seriously.

Commercial property owners should act now to review buildings insurance policies, paying particular attention to the accuracy of rebuild costs and sums insured.

We work with RebuildCostASSESSMENT to provide either:

1. A desktop Rebuild Cost Assessment for just £125 + VAT*.
2. A full site valuation service.

We can review your building insurance policies, paying particular attention to the accuracy of rebuild costs and sum insured.

Click here for more information or contact your Marsh Commercial adviser. Keep your insurance provider informed.

This all gives a flavour of the steps you can take to manage the weather-related, security, and underinsurance risks affecting your business property.

But it’s also vital to keep your broker or insurer informed, as any steps you take to reduce or manage risk can help to position your business as a more attractive proposition for insurers. In turn, that could give you greater choice when it comes to finding the right insurance and may even help you to secure more affordable cover.

_{*rebuild cost assessments is subject to qualifying criteria.}

_{*This product/service is not regulated by the Financial Conduct Authority.}

_{The information contained herein is based on sources we believe reliable and should be understood to be general insurance and risk management information only. The information is not intended to be taken as advice and cannot be relied upon as such. Statements concerning legal, tax or accounting matters should be understood to be general observations based solely on our experience as insurance brokers and risk consultants and should not be relied upon as legal, tax or accounting advice, which we are not authorised to provide.}

Sources

1. marshcommercial.co.uk/risk-hub
2. fsb.org.uk/cost-of-doing-business-crisis.html
3. marshcommercial.co.uk/articles/preparing-your-business-for-extreme-weather/
4. netwatchsystem.com/7-tips-to-secure-your-business-this-christmas/
5. rebuildcostassessment.com/which-properties-are-most-underinsured