case study 2

Premiums reduced and true risk addressed

Our clients, a precision engineering company, with 23 employees, based in South Wales, was approached by us to provide a competitive alternate quotation at the renewal date of their insurance policies.
We undertook to review the arrangements and made recommendations based upon our assessment of the risk.
In particular, we identified that 80% of the clients business was generated through the operation of one particular item of machinery, for which the lead time to supply, from a sole German based manufacturer, was at least 5 months.
On the other hand, the risk of theft from the premises was nominal, the stock was relatively unattractive to thieves, having a low residual value, the physical protections at site were exceptionally good, (as is often the case where steel fabrication is a routine part of the client’s trade), and most of the equipment far too heavy to be simply stolen, without substantial lifting gear and several days of uninterrupted effort by potential thieves.
The result; the client is now properly protected against the true risk of business downtime following crucial machinery breakdown/loss and the premium overall was reduced significantly by the client electing to carry the modest theft risk themselves.
The point of this exercise was not to reduce cover in return for a premium saving, that would always be easy, reduce cover and pay less, but to identify and quantify, the true risks facing the client and to address these.
The client had been insured with the same broker for many years, they were understandably reluctant to cause upset to this long standing relationship, however the client accepted that their previous broker had never properly addressed the risk factors, which we identified by a careful and thorough examination of the business.

Even the other broker had to admit, eventually, that the trade off between a virtually useless and expensive theft cover was, “no comparison” for the easily perceived benefits of cover for loss of profits due to machinery breakdown.