Businesses are Overpaying by 20% on Insurance Premiums!
Coping with rising insurance premiums has become an increasingly serious issue for business both in the US and worldwide. The economic downturn of the past year or so in particular has brought this situation into sharp relief. Yet often overlooked is the fact that according to recent findings, as much as 70% of businesses are overinsuring their fixed assets!
The problem arises from a systemic lack of accurate and up to date information in the asset register, the database which keeps all the information on tangible assets. What ends up happening in this scenario is paying for insurance on fixed assets they don’t even own any longer. Another scenario is where the value of insured assets has depreciated to the extent where the insurance premiums could be lowered simply by calculating this asset depreciation.
This issue is compounded at the time of the insurance claim itself, when a lack of detailed information causes insurance companies to challenge or underpay on claims. This information includes detailed descriptions, serial numbers and proof of locations.Think of a similar parallel at home - if your house was burgled and you claimed on house insurance, imagine what the outcome would be if you failed to provide a reciept for your TV, computer and other items.
A lot of the time when an asset is replaced or thrown out, it is no longer seen as a problem by the financial people since its value on the company books has degraded to zero.What this means is that updating the asset database is not high on the to do list for many. The cost is merely put off, however, until such time as yo do need to make an insurance claim, at which point the lack of an up to date asset inventory will really cause you problems with your claim.
It probably wouldn’t come as much of a surprise to a lot of businesses to hear they dont have the best grasp of the state of their fixed assets. But I don’t feel many organizations know just how bad this is. Even less known is the extent of the savings that could be made from proper asset managment on insurance costs, and the gains in improving the success and outcomes of claims. A leading expert in fixed asset management software estimates that on average organizations are over-insuring by more than 20%. Surely that justifies some serious time and investment on making sure you have a decent asset tracking system in place.
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