We really do care – Ideas to save insurance premiums for your business insurances

As you may know JW Seagon, has set up our own Covid-19 ‘taskforce’, in order to facilitate the way we work and prioritise staff welfare during these unprecedented times, but also to ensure that we are providing our clients with relevant information. We sincerely hope that we have not ‘overdone’ things and that what we are providing is useful to you.

Of course, the major issues facing businesses at the moment are budgets, cash flow, minimising expenditure where they can and generally seeing what can be done to ensure that your business is still intact when the troubles have passed.

Insurers and Brokers are always keen to be visible when there are new business opportunities or renewal negotiations, but how many are there that have advised you on how premiums can be saved without increasing your exposure? At JW Seagon, we have been pro-active in announcing various options to specific sectors, in order to enable them to make savings on their insurance premiums.

Whilst we may not have all the answers, and whilst these savings may not apply to you and you are happy that you have ‘cut your cloth’ accordingly, we would like to share some tips and advice on what can be done.

Insurer Choice

In view of the low ‘insurance penetration’ rates of the area, most insurers are keen to write new business. Whilst there are certain minimum rates applicable to the market, there are also heavy discounts available based on risk management, size and claims experience. You can also commit a long-term agreement with certain insurers, and they will usually provide a generous discount for this commitment.

Having said the above, watch out for Insurers “buying in the business”. In effect, they may discount heavily to attract you, but change the rates to the correct structure the following year, meaning you are having to start afresh. Also, be very careful about choosing an insurer. Ensure they are financially secure, well known and have the capacity to pay your claims.

Duplication of Covers

One of the strangest things we see regularly in this market are insurers offering and providing so called ‘Industrial All Risks’ (IAR) covers, and then selling businesses a separate All Risks policy for valuable equipment; an Electronics Equipment policy for electrical equipment a Computer policy for IT equipment and a Glass Breakage policy for accidental breakage of glass. Simply, if you have an IAR policy, all these covers are provided under this policy, so no need to have the other covers.

You will be paying normally 5-10 times the rate for these superfluous policies, but you do need to check your wordings to see if they provide anything additional. Normally the extras they provide are worth a few shillings in extra premiums. All JW Seagon policies are full ‘All Risks’, so you will have the one overall cover.

First Loss Covers

First Loss cover is where you decide that a loss could not exceed a certain amount at any one time, and you can insure for that amount. Typically, Burglary cover is arranged on that basis, i.e. your total sum insured is KES 100m, but at any one time, only 10% of that could be damaged or stolen in the event of a loss.

Whilst there are not many policies that can be written on this basis, there are some that can. Typically, Political Violence and Terrorism (PV&T) can be and this can have a significant saving, particularly for multi-site businesses. Let us say that you have total assets insured for KES 400m, spread over 4 sites. Instead of insuring KES 400m at a rate of say 0.10%, and paying KES 400,000 annual premium, why not look at your largest site and insure on a ‘first loss’ basis, i.e. it is highly unlikely there would be two terrorist attacks on two different sites simultaneously. On my example, you have just saved KES 300,000 per annum


On the subject of PV&T, is this a cover that you could consider cancelling for the moment?

If you want to discuss the wider implications of cancelling the cover, and possible cost savings, please call us.

Premium Instalments

Much has been spoken and written about local rules for premium collection, ‘cash and carry’ no cover before receipt, etc. The whole issue over the Insurance Act Amendment is in abeyance. It was introduced, it was repealed, and is now stuck in the legal system pending the re-opening of the courts. As such there are no new rules governing this issue in Kenya, although in other regions, it has been in existence for some time now.

Whilst, we are tightening up on premium collection to avoid the risk of ‘bad debts’, we do have agreement with our major Insurers to offer instalment facilities, at no additional charge. With Banks charging 4-6% of the premium, this can be quite a saving for businesses, plus, during these difficult times, a real help to cash flow.

WIBA/Employers Liability

There are three quick ways that you could make significant savings on your WIBA policy.

  • Premiums are almost always based on your annual wage roll. Sadly, some businesses are being forced to cut back on staff, reduce salaries or temporarily suspend staff. So, if your salary payment expectations are that this will reduce and your renewal is due, then declare your new revised estimates and ensure your premium is based on these correct numbers.
  • Secondly, and something we see at JW Seagon all the time, is the fact that wages are ‘lumped’ together and disclosed to an insurer without a split. Again, simply, staff working in the office, whether management or other clerical workers, have less chance, statistically, to be injured at work, than someone doing manual labour. As such, there are two different rates applied to each category, so take the time to split your wages when declaring them between Clerical/Managerial and All Others. Often the All Others rate is double that of Clerical, so you will be wasting massive premiums by not doing this exercise.
  • Lastly, many companies are very generous and provide WIBA Plus cover, i.e. they will provide the same WIBA cover for staff for injuries outside work, as well as whilst at work. The cost of this cover can be 30-40% of your WIBA premium, and you have no legal responsibility to provide this benefit. So, for now, it may be one that you can suspend, but be careful, if it is deemed to be a staff benefit, you may be required to consult your staff or take advice before removing it.

Liability Insurance

Some Liability policies, Products Liability, Directors & Officers Liability, Professional Indemnity insurance, etc, are often based on your annual turnover. If you anticipate your turnover will be reduced, then consider advising your insurer or broker to reduce your Liability Insurance and see if this will make a saving.

We have many clients in the Tourism sector and presently the numbers of guests have reduced massively, and in many cases, stopped completely. So, consider reducing your levels of cover; no guests, no risk. Just ensure that you can increase it again in the future.

Motor Insurance

As you will be aware, if your vehicle is used on a public highway, the minimum requirement is to have Third Party cover, and we recommend you continue with this on the basis that the costs are so minimal and it is unlikely you will obtain a rebate of your premium if you cancel mid-term.

However, if you have safari vehicles, or transportation vehicles, and they are no longer being used then consider changing from Comprehensive cover, to ‘Laid Up’. In effect, this will cover the vehicle for being static for Fire, Perils and Theft and it will just remove the Accidental Damage aspect, which is the major part of the risk for loss or damage to your vehicle. Not all insurers will offer you this, but some will, and a significant saving can be made.

I hope some, or all, of this article will be of use. You may well have thought of these things yourself or your insurance adviser may have proposed it already, or perhaps you feel that you do not have to reduce your costs at present.

If, however, you feel there is an opportunity to make these savings, JW Seagon would be delighted to assist you on a ‘no obligation’ basis.

Thank you and stay safe.

For more information please email JW Seagon at pink@jwseagon.com or call us on +254 (0)709 445 000