Let’s Talk Budgets: Is Your Insurance Cover and Cost Right for Your 2024 Strategies?

As the year winds down and year end looms, businesses are in the midst of the budgeting frenzy—strategising, planning, and forecasting for the year that lies ahead. How can we move forward, improve profitability and enhance our business? 

 It's the season where every line item is scrutinised, projections are fine-tuned, and growth strategies are set in motion. Yet, amid the flurry of numbers and projections, there's one crucial aspect that often slips through the cracks – corporate insurance. 

For many companies, insurance is an indispensable part of their financial planning. However, it's not uncommon for organisations to treat insurance policies as an annual routine, merely adding them to the budget, adjusting for inflation, and rolling them over into the next year.

Two questions that beg to be asked: Firstly, in the rush to align budgets with strategies for 2024, are businesses certain that their insurance coverage aligns to their objectives, evolution and future plans? And secondly, is the insurance fit for purpose, enhancing business resilience and aligned to risk appetite? 

The Overlooked Piece in the Budget Puzzle 

Let’s face it—insurance may not be the most riveting part of budget discussions, but it is undoubtedly a linchpin in safeguarding a company’s assets and mitigating risks. Often relegated to the background, insurance policies are reviewed briefly, if at all, and companies run the risk of carrying outdated or insufficient coverage into the future. Simply put, focus is often just on the size of the premium rather than on the scale of the risk; the assets and liabilities which need protection. 

The Cost of Complacency 

Rolling over insurance policies without a comprehensive review could lead to a myriad of problems. In a dynamic business landscape, companies evolve, risks change, and the insurance landscape itself undergoes shifts. What may have been adequate coverage last year might fall short in the face of new challenges, external factors and internal business strategies. 

Consider this: A company looking to expand internationally may face different risks than it did when primarily operating domestically. If the insurance policy doesn’t alter to address these new exposures, the company is essentially leaving itself vulnerable. The cost of oversight in this scenario is not just potential financial loss but a dent in the very foundation of strategic planning.