How to Reduce Insurance Costs Through Consolidation?

Now that the world has, for the most part, emerged from the shadow of the COVID pandemic, many businesses look to their future and shift focus from survival, back to growth. However, at the time of writing this, the world is still a turbulent place.

Sanctions since the start of the war in Ukraine have impeded many operations both small and large, and as the UN warns of a looming global food shortage and at the same time governments and major corporations strive to reduce their dependency on fossil fuels, the path to success and profitability remains foggy and by no means straight forward. It is at this time that many operations here in the UAE are looking to streamline their expenditures, and insurance is often at the top of the pile. 

A reputable insurer such as Beneple will be able to conduct a thorough risk gap analysis, looking at all areas of your business’s insurance to see what ways we can reduce insurance costs (if any).

What is Insurance Consolidation?


What is Insurance Consolidation?


When talking about consolidation within the insurance industry, the term can cover multiple topics but by and large, it is the process of combining multiple accounts/entities into a single design that has a positive impact on company resources, including but not necessarily financial resources. When undertaken correctly, you can achieve increased financial and administration efficiencies with little or no impact on business/employee coverage.


Should I Consider Consolidation for my Business?


Should I Consider Consolidation for my Business?


For starters, whether it is a good idea to look at consolidation will depend on multiple factors and is not a one size fits all solution.

Typically, businesses that benefit from consolidation are those that have been operating for over 5 years and have grown with acquisitions or undergone structural changes. For example, we frequently see businesses that have merged or acquired new entities tend to have a fragmented medical and general policy structure. There is often duplication of coverage in terms of General insurance policies and mismatched benefits when looking at medical lines.


How Could I Consolidate my Insurances and Reduce Insurance Costs?


How Could I Consolidate my Insurances?


There are a few approaches to policy consolidation and will depend on what you want to achieve (do you want to streamline your administration process, reduce expenditure, or both?). Below are a few points to consider no matter what your end goal might be:

1. Consider insurers who have multiple capabilities – Some insurers cover Medical, some focus on General business. Some do both. In some instances, an insurer may offer enhanced rates for groups that can insure both medical and general policies with them. This can be an attractive proposition for insurers as it allows them to gain additional margins or spread their exposure, increasing the likelihood of achieving profitability. This is also preferable for a client as they can potentially leverage this for reduced premium rates as well as dealing with one insurer rather than multiple for each policy.

2. Combine Categories (Medical) – Many businesses categorize their benefits based on staff seniority or other factors. It’s incredibly commonplace and a useful way to control premiums. However, there can be too much categorization… I see many instances of categories for the sake of categories. Companies that have 4, 5, 6 + categories when in practice, they could maintain 3 or sometimes even less. Sometimes the perception is that multiple categories equate to cheaper premiums, but this is not always the case.

In almost all instances, the more categories there are the more administrational resources are required to manage the category count. In addition to this, with more category options there is a greater likelihood of employee dissatisfaction. This in turn can manifest into a lack of fulfilment and eventually can lead to the loss of employees to competitors who have a more robust benefit structure.

Many businesses cut back on benefits during 2020 as a means to reduce operating expenditures due to the pressures of the covid pandemic. For those that do not wish to dilute their benefits any further look to alternative methods to maintain a balance between premium efficiency and strength of the cover.

Consolidation of existing medical and general policies is an efficient and positive way to streamline both costs and administration resources with little or no impact on the workforce.

If you would like further information on how to reduce insurance costs or would like a complimentary risk gap analysis get in touch with the qualified team of brokers at Beneple who will be happy to help.