Situation desperate in insurance

Situation desperate in insurance

Resellers that have been locked out by insurance companies are turning to alternative means of protection, as third-party outfits move to fill the gap left by the more mainstream agencies.

Prudential Surety specialises in insurance placement and the development and implementation of insurance and extended warranty programs for the IT industry. The organisation began by offering financing options for IT equipment but last year expanded into insurance and warranties.

"These programs characteristically focus on segments of the market that are not traditionally serviced by the insurance industry," said Prudential Surety's Tim Mackensie.

The company helps match the reseller's requirements with the right insurance company and policy. "We are not a broker," Mackensie stressed. "We are actually an insurance agent for people looking to get insurance."

Another alternative for the channel is to employ a third-party claims administrator. With insurance premiums skyrocketing, companies can elect to take on a higher excess. This puts them in good standing in the eyes of an insurer, according to Philip Relf, NSW business manager at Whyatt Gallagher Basset.

"If there is a higher excess, it encourages organisations to take responsibility for their own risk," he said. "The insurance industry refers to the practice as risk management."

Under the scheme, a company would opt for an excess of, for example, $10,000 instead of $500. In the event of a claim, Whyatt Gallagher Basset becomes involved to help reduce the cost of the claim.

"We are not an insurance company ourselves -- we are strictly a third-party claims administrator. All we do is handle insurance claims for other people. Using this approach, the underwriting insurance company is usually much keener to take on the risk, premiums are reduced and the insured take steps to minimise the risk of loss."

The claims administrator can take on one or many aspects of insurance, from property to indemnity.

"It won't suit everybody, but it is an alternative to going out of business and it might save more than the premium in the first place."

Many companies, Relf said, place the money they would otherwise have spent on the premium into a fund, which is then used in case of a claim under the excess amount. "When someone is sharing the risk, they are going to be more careful."

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