Perfect Practice...
It is important to understand that the amount of premium an
insurance company charges is based on the amount of claims likely to be paid on the
policy. The actual claims history for the
particular policy in preceding periods of insurance is the most valuable statistic in
determining this amount, but other factors play a part.
Overall claim trends for that class of insurance may have an influence. As stated, there has been a significant increase
in the incidence of litigation for negligence, as there has also been an increase in the
quantum of awards being made. Even though a
particular policyholder may not have had a liability claim in preceding periods, the
likelihood of such a claim occurring in the future has increased, therefore this provision
will be reflected in the liability premium charged.
A typical sports policy includes liability protection and personal accident
protection. In setting the total premium an
insurer will generally apply a dollar value to the liability section of the policy and
likewise for the sports accident protection. When
reviewing results for renewal purposes the insurer will typically look at each section
independently rather than a combined result. As
liability claims can be for extremely large amounts the premium to meet claims is provided
for over a long period of time and therefore it is not viable from the insurers viewpoint
to fund liability exposure by using the premium generated by the sports accident portion
of the policy. |
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So what can a sport do to keep it’s insurance premiums to a minimum? Shopping around each year in search of the elusive
cheap premium is a very short term approach and will prove costly in the long run. The real solution for a sustainable insurance
program is to keep claims to a minimum in terms of incidence and severity. As fewer claims means fewer injuries and less
liability exposure, the greatest benefit from achieving the goal of fewer claims is not
lesser insurance premiums, but physically and legally safer sport.
Returning to the subject of best practice management - quality management of the
risk exposures of sport is critical for the safety net of insurance to remain a cost
effective risk financing alternative. Perfect
practice makes perfect.
IEA
has offices in every state. National freecall number 1800 SPORT1
(1800776781)
Email:info@ieasport.com.au
The editor of the IEA Sport Monthly Update is
joint Chief Executive Officer, Rod Hughes.
Disclaimer
The information provided in
this Email and on the IEA web-site is to be used as a reference only. IEA accepts no
responsibility for the accuracy of the information or your reliance upon it.
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