The Value of Risk Management for Middle Market Businesses in Australia:

A Case Study with Austcover

In the ever-evolving landscape of middle market businesses in Australia, effective risk management is crucial for securing and optimising insurance coverage. Historically, this sector has struggled to effectively implement risk management techniques due to the high costs of monitoring and implementing.

Austcover is changing this narrative by leveraging Steadfast’s innovative iSurveyRisk tool. This tool provides high-quality risk surveys at an affordable cost, transforming how middle market businesses approach risk management. Here, we delve into the benefits of these advancements through a detailed case study of a food manufacturer in New South Wales.

The Benefits of Risk Management for the Middle Market

Middle market businesses, which lie between large enterprises and small businesses, have unique risk profiles and insurance needs. Effective risk management in this sector offers several key benefits:

  • Affordable Risk Surveys: Broker-driven surveys allow high-quality risk assessments for under $150 per site, helping to make detailed evaluations accessible even for businesses with modest budgets.
  • Enhanced Services: Comprehensive risk reports enable brokers to provide tailored, actionable insights and recommendations, enhancing service quality for middle market clients.
  • Addressing Historical Underservice: The middle market has often been neglected due to the high costs of on-site assessments. Tools like iSurveyRisk help bridge this gap by enabling thorough risk evaluations without physical site visits.
  • Improved Information Quality: Advanced tools can help collect and provide detailed, accurate data to insurers, reducing the likelihood of further assessments or quote rejections.

Case Study: Food Manufacturer in NSW

A food manufacturer in New South Wales, extensively using Expanded Polystyrene (EPS) in its production facility, faced challenges in securing comprehensive insurance coverage. Here’s how Austcover’s risk management implementation made a difference:

Initial Insurance Coverage:

  • Industrial Special Risks: $53,700
  • Public & Product Liability: $5,400
  • Commercial Motor: $2,100
  • Total insurance spend: $61,200

The business was exposed due to the lack of essential coverage in Machinery Breakdown, Management Liability, and Cyber Insurance.

Post-Austcover Risk Management Implementation:

Using the iSurveyRisk tool, Austcover assessed the business in detail and suggested several pragmatic risk mitigation steps resulting in reduced premiums and securing previously uninsured coverage:

  • Industrial Special Risks: $37,900
  • Public & Product Liability: $5,400
  • Commercial Motor: $2,300
  • Machinery Breakdown: $5,600 (previously not insured)
  • Management Liability: $5,900 (previously not insured)
  • Cyber Insurance: $2,500 (previously not insured)
  • Total insurance spend: $59,600

Austcover was able to implement cost effective risk management and benefit the client by materially improving their balance sheet risk transfer across three major areas; breakdown of critical pieces of machinery, cyber attacks and obligations of directors & officers under statute.

Investing time in the risk management process yielded substantial results. The business not only achieved cost savings but also significantly expanded its coverage, enhancing its overall insurance program.

The Role of iSurveyRisk in Enhancing Value

Self-driven surveys like iSurvey are crucial in this transformation. They empower brokers to conduct detailed assessments and gather extensive data without expensive site visits. This tool helps to deliver real value to middle market businesses by:

  • Providing detailed, actionable risk assessments at a fraction of the traditional cost.
  • Enabling businesses to present a stronger case to insurers, attracting more competitive quotations.
  • Facilitating better risk management practices, leading to broader and more comprehensive insurance coverage.

Conclusion

Advanced risk management tools like iSurveyRisk by Steadfast Risk Engineering are a significant step forward for middle market businesses in Australia.

By making high-quality risk surveys affordable and accessible, brokers can now offer enhanced services previously deemed uneconomical. This not only improves the insurance landscape for middle market businesses but also helps to better protect them against potential risks, fostering a more resilient and robust business environment.

Important notice
All information in this brochure article is of a general nature (and has been prepared without taking into account your particular objectives, financial situation or needs. Before acting on any information contained herein, you should consider its appropriateness to you.). The information provided is not intended to replace any accounting, financial, insurance broking, legal, tax or other professional advice. Steadfast Risk Engineering Pty Ltd ABN 35 629 218 917.

Austcover Pty Ltd ABN 46 073 425 662 holds Australian Financial Services Licence No. 241799.