Unveiling the Power of Strategic Risk Hygiene
As we embark on a new year, many of us set resolutions to enhance our health, finances, and overall well-being. Alongside these pursuits, Andrew Lilley, Joint CEO of Econorisk, suggests taking the time to reassess our risk exposure and insurance needs for 2024.
To achieve these goals, it’s essential to start with a thoughtful plan, beginning with an honest evaluation of our current situation, defining objectives, and outlining the necessary steps.
Reflecting on the past year helps identify vulnerabilities in coverage and previously overlooked exposures. Looking forward, considering emerging challenges is crucial, from infrastructure concerns to cyber threats and global events impacting our lives and businesses. It’s important to take proactive measures to ensure comprehensive protection, says Lilley.
In today’s evolving risk landscape, environmental and technological risks pose increasing challenges with climate change and cybercrimes highlighting the necessity of reviewing insurance policies. With the rise in power surges during loadshedding and cyber-attacks, adjusting coverage to address emerging risks is vital. Regular policy reviews, especially in areas like power surge coverage and cyber insurance, help policyholders adapt and guard against risk exposures and underinsurance, providing confidence and resilience to navigate future uncertainties, emphasises Lilley.
Coverage for power surges and safeguarding against loadshedding.
In 2023, South Africans faced numerous challenges, enduring over 330 days of loadshedding, signalling a notable escalation in the country’s power-supply crisis. The frequency of unexpected power surges and loadshedding prompted most insurers to make substantial adjustments to their approach to power surge coverage. These modifications involved restructured excesses, changes in policy wordings, the introduction of explicit definitions for power surges, optional coverage with specified limits, and, in some cases, the imposition of waiting periods for new coverage. Individuals must familiarize themselves with the conditions of their power-surge coverage and understand the extent of protection available during periods of loadshedding.
Cyber
In an era marked by escalating cyber threats, South Africa has emerged as a prominent target for ransomware and email attacks. Ranked among the top 10 countries most affected by cybercrime, South Africa faces significant challenges in combating this growing menace.
Worldwide, phishing and online payment fraud persist as the most pervasive cybercrimes. Recognizing the prevailing risk of cyber threats, it is imperative to note that cyber insurance is not only critical but also accessible. Integrating cyber insurance into your comprehensive insurance portfolio is essential, offering robust protection against the burgeoning danger of cybercriminal activities. Moreover, individuals must be aware that they can secure personalized insurance coverage against cybercrime for themselves and their families.
The increasing cyber threat poses a significant challenge within the South African business environment. Given the dynamic nature of cybersecurity risks, obtaining cyber insurance is essential to protect against potential financial losses stemming from cybercrimes. It’s crucial to remain vigilant and prioritize cyber insurance as a key element of your risk management strategy in this era of heightened digital vulnerability.
The subtle danger of underinsurance
Recognizing the subtle danger of underinsurance is paramount for policyholders, necessitating an annual review of their coverage values. Neglecting this advice can have significant consequences, as the failure to incrementally raise contents cover each year can potentially result in policyholders being substantially underinsured.
Additionally, policyholders should remain vigilant during the renewal process, approaching it with fresh eyes to assess any evolving business dynamics. For businesses, the stakes are high as underinsurance poses a threat to the entire survival of the enterprise. Whether triggered by inclement weather, a cyber-security hack, or a destructive fire, a single loss event, no matter how seemingly trivial, can prove disastrous if a business is underinsured. It is crucial for business owners to break free from the assumption that major loss events will not happen to them, recognizing that comprehensive protection is essential for resilience in the face of unforeseen challenges. Furthermore, business owners should consider all factors affecting their businesses during the renewal process, including potential growth such as the addition of new employees.
We often underestimate the replacement costs of our belongings, so making an inventory is a valuable tool to use as a checklist. We encourage individuals to do a review using a comprehensive inventory list to ensure all contents are considered and have been factored in when taking out insurance or reviewing a policy. View Econorisk’s inventory list here.
Best Practices for 2024
In navigating the intricate landscape of insurance risks in 2024, the call for strategic risk management services extends beyond conventional coverage. Adopting best practices is paramount for both personal and commercial policyholders.
First and foremost, policyholders are strongly advised to take actionable steps in understanding and optimizing their coverage. This includes a meticulous review of policies, ensuring accuracy in declared values, and staying informed about any modifications. Emphasizing the pivotal role of experienced insurance brokers, individuals and businesses alike are encouraged to seek out experts with specialized knowledge in their specific insurance needs, underlining the importance of collaboration to navigate the complexities of risk mitigation effectively.
During the renewal process, businesses, in particular, are urged to take a fresh look, considering any changes in dynamics such as increased staff, or expanded operations.
Additionally, awareness of emerging risks, especially with the advent of AI, is crucial, requiring proactive measures to address potential new challenges.
As a final reminder, the severity of cyber-attacks highlights the need for robust cyber insurance coverage. It is imperative that policyholders prioritize protection against this ever-present threat.
These best practices collectively ensure that policyholders are well-equipped to navigate the evolving risk landscape and make informed decisions tailored to their unique circumstances. By actively engaging in these risk management practices, both individual and business policyholders can safeguard their assets against potential threats and ensure the resilience and adaptability of their insurance portfolios in an ever-changing environment.
Contact Econorisk for expert advice and strategic guidance.
