Published on: 24 March 2021 by Michael Lamb
As we approach easter many people are looking at doing some spring cleaning and getting ready for a summer full of (hopefully) activities and fun. As part of this, you should be taking some time to think about the risks in your life, and how you are managing them.
Spring cleaning is a great habit, it helps you to get rid of things you no longer need or want, while creating space in your home free of clutter and rubbish.
Just like you tidy your home, you may need to re-evaluate your insurance; especially if it has been some time since you purchased it.
In life people grow and change. The clothes you wore last year may not work for you anymore; they could be too small, or thread worn, or just unfashionable. So, you go buy new clothes and get rid of the old ones (ideally through donating them).
Insurance should work the same way, but people often forget to look at how their coverage is impacting them, and what else they could be doing to better protect themselves against the many risks they face. There is a tendency in insurance to “set and forget” and assume that once a policy is in force, it will continue to operate just as well 10 years from now as it does today.
In some cases, this may be true – life insurance, for example, is a long-term product that doesn’t need to be re-evaluated or benchmarked often. The policy is designed to protect against a specific risk and, in the case of Term Life Insurance, over a specific length of time. With life insurance, and more specifically Term Life Insurance, because of the nature of the product there are natural spaces for the policyholder to evaluate the level of coverage they are receiving and how well that coverage applies to their own life.
However, there are other types of insurance where it is useful to periodically evaluate your policies and determine whether a change is needed.
As an aside here, it should be noted that whether you are a CCW Global customer, or if you are simply looking for new Hong Kong Insurance protection, the team at CCW is able to offer no-cost, no-obligation consultations regarding the products and coverage solutions which may be most applicable to you.
Car insurance is a great example of a product which should be periodically reviewed and updated. In fact, staying on the same car insurance policy could be financially detrimental to you as there may be more competitive deals with alternate underwriters.
If you are not checking the cost of your car insurance every one to two years then it is possible that you are missing out on savings. This is especially true if you have moved home, or changed employment as both of these variables will impact the overall premium that you will pay for your policy. On top of this, if you are a safe driver with a high No Claims Discount (representing one or more years of no at-fault accidents) then you may be offered attractive discounts to switch your coverage to a new insurance company depending on other factors in your policy.
The simple fact is that Car Insurance is the lowest hanging fruit for ensuring that your insurance is working for you. It is an extremely simple class of policy, with very straightforward underwriting in a highly competitive market.
Health insurance is the next obvious choice for assessing your protection. It is an annual contract that has a material and fundamental impact on your life – so the coverage has to work. In many cases it is extremely tempting to perceive health insurance as a continual static product, but this fails to take into account your changing life situation.
If you’re looking to get married and have a family your health insurance needs will be very different from those of a single person. Likewise, a family with older children may not need as comprehensive protection as a family with infants. Changing life circumstances often get forgotten when it comes to adjusting the health insurance coverage you hold.
Its not just on a personal basis, either, that we encounter this issue. Businesses also fall into the trap of getting far too comfortable with the policy they currently hold. This is understandable in the current economic climate where there is a fear of change and risk, but there is opportunity in change.
In October we discussed the fact that Insurers are open to offering significant discounts to groups that consider changing providers. This situation has not fundamentally changed, and if your existing policy has not been reviewed in more than 2 years, or if you want to save some money, then it is imperative that you explore your options.
Domestic Helper insurance may be a surprise inclusion on this list, but Domestic Helper Insurance is actually a critical type of insurance as it includes statutory employee’s compensation cover under the umbrella.
Domestic Helper Insurance policies operate for either a one- or two-year period. If you are holding a two-year policy, this coincides with the length of your helper’s employment contract enabling you to assess both the employment situation and insurance protection at the same time.
As the employer of a domestic helper, you are responsible for covering the costs of any medical treatment your domestic worker may require during the course of their employment. However, many employers choose not to include any health insurance protection in their helper’s coverage – leaving them out of pocket should the worker require any medical treatment. Unfortunately, the policy will be in force before this gap is realized, if you have chosen a domestic helper insurance plan which does not include health insurance cover, but the plan’s renewal date is an excellent time to assess its ongoing validity.
If you are a business, then best practice is to review your full suite of risk management products at least once every two years. While you may be comfortable with some aspects of your coverage, like your health insurance or professional indemnity protection, changes in the economic landscape and within your own business may mean that you are leaving yourself exposed if you do not perform the necessary due diligence.
For some small businesses a conversation about what insurance they should be considering has never taken place; once the regulatory requirement is satisfied with respect to employee’s compensation cover, no further discussions take place to consider additional risks. Another worrying aspect of the Hong Kong SME sector is the lack of consideration paid towards employee risks, and keeping those risks updated.
A great example of this is Keyman Life Insurance which should be regularly adjusted in line with the employee’s importance to the organization. As the business grows, as should the coverage being held on key and critical employees. This is likewise true for Professional Indemnity products, which should generally cover at least 2 years’ worth of revenue. As such, a growing company should be looking at adjusting their Professional indemnity coverage upwards every year if they do not wish to expose themselves to claims outside their coverage limits.
It is very tempting to settle into routine and assume that everything is fine.
This is, however, not always the case.
CCW Global strongly encourages our customers to take a hands-on and involved approach to their insurance; they know what is happening in their life. But it is important that they also understand what is, and what is not working.
As we approach Easter and the potential of summer, now is a perfect time to sit down with your insurance and review your policies. If you need any assistance, or have any questions about what solutions may be appropriate for your specific needs, please Contact Us to arrange a no-cost, no-obligation consultation with a CCW Global Broker.
We’re Simplifying Insurance in Hong Kong.