If you`re thinking of reaching a long-term deal, it`s important to read the fine print and see exactly what you`re getting. I believe that long-term contracts benefit insurers and brokers much more than their clients. So, as an industry, do we fail our customers? This means that the business is effectively tied up and cannot easily switch to another insurer or insurance broker who offers more advantageous terms until the end of the five years, even if they are not satisfied with the service they receive. However, if the insurance company decides to increase the premium, for example because of a bad experience of claims, it can generally get out of the LTA easily. In today`s marketplace, when insurance companies compete and offer discounts for new business, loyalty cannot always be rewarded. I spoke this morning with a business manager who had entered into a five-year long-term contract (LTA) on the company`s business insurance to save money. In other words, they had signed an agreement that promised to stay at least five years with the same insurer (and probably the same insurance broker). A reduction of 5 to 10% on insurance premiums due during this period was probably agreed for this loyalty. Is it a good idea to sign a long-term contract in exchange for a discount on your business insurance premium? So before deciding whether a long-term contract is a good idea or not, do you think who will benefit the most – you, your insurance broker or insurance? I advise you not to change your insurance every year – it stifles competition and interest in the market – but I strongly advise you to protect your freedom of movement.
Your broker should have confidence that he can get results from year to year, not just every 3 years. The ability to change within a specified 12 months is an undeniable advantage in negotiating bonuses, fees, coverage and service.