Security firms could benefit from rate reductions of up to 20 per cent for their cash in transit (CIT) cover due to new players in the niche insurance market, according to Aon’s fine art and specie team.
Due to the competition, the global insurance broker is urging companies to focus on how to prevent or control attacks to secure better premiums.
Premiums for the compulsory CIT insurance, which covers theft or damage of money or valuables while in storage or in transit, have seen little movement over the last 24 months but the market is turning with new entrants in the global marketplace. This has created competition in the London market, which provides 80 to 90 per cent of all global cover and includes US$1.5bn capacity from Lloyd’s and London company market alone.
Barry Vickery, director of Aon’s fine art and specie team, said: “Now is the time to benchmark premiums and coverage with insurers, which is reflected in how we’re increasing coverage and driving premium decreases of up to 20pc in what has been a stagnant market. Insurers hint that rates are hardening – however, we have experienced reductions for those companies with good track records that demonstrate proactive risk management plans.”
Daniel Smith, director of Aon’s fine art and specie team, added: “To secure lower rates, firms need to differentiate themselves through risk mitigation and take the time to explain this to insurers. Taking higher deductibles can also put companies in a better position to negotiate. Unfortunately there can sometimes be a gap in understanding of risk between the global security companies with dedicated risk managers and the smaller, independent firms. While negotiating the best rates, the latter need to understand the perils of only being offered an inept policy that is littered with exclusions and fails to pay in the event of a claim.”
In what the firm calls the current competitive climate, Aon recommends that:
1) firms’ CIT risks are fully marketed to a range of insurers to benchmark premiums and engage in healthy competition;
2) time is spent with insurers to allow them to gain an understanding of the firm’s risk management and mitigation procedures;
3) broad cover is achieved to ensure claims are paid in a timely manner . A large focus has, and will continue to be, on premium spend, however, wordings can vary substantially between insurers so it is critical to not to forfeit cover over premium.
