Here’s what you need to understand and insurers and risk management

Would a few people do business on the premises regularly suffice?

Few people do business on a regular basis in the premises that would meet the occupancy requirements. There’s a lot of downscaling going on right now, and a lot of people are doing it. You’ve probably heard that everyone is transitioning to a hybrid model these days. Some people work from home and come into the office twice a week. But, at the end of the day, if large corporations implement this hybrid model in offices in towns and across the country, they will still have a small staff, which will be sufficient to meet occupancy requirements.

What should the potential customer do?

At the moment, with the low renewals offered by insurers, everything is increasing. So it’s a soft market. For years, always has been soft. That means that its cheap premiums are a kind of race to the bottom. What’s happening now is that the low premiums are going up. And they’re going up at least, by about 10%, in all classes of business, at least as far as we can see. But what that does is it makes the market tougher.

The premiums are as they should be, but this is not in the best interests of the customer. Of course, they don’t see it that way because it means less money in their pockets. After all, they are required to pay higher premiums. But it’s hardening, and it’s getting back to normal. And it wasn’t until the mid-1990s that the market began to soften. At the time, Robert Fisher was ensuring buildings worth half a million pounds, and that’s no exaggeration. A certain insurer paid £59 for a half-million-pound building.

It was also an insurance policy for the proprietors. It generates no profit for the broker. An insurance company that was very, very good, well-known, and still current, but for those premiums. But he had to ensure a half-million-pound building today, you know, six, seven, eight hundred pounds. There was one particular company with a low price range. So if your building was worth 500,000, you paid the same as if it were worth 50,000. That’s one thing they got (the premiums they got), obviously, (that’s no longer the case), and they had to exit that particular market segment, which was the landlord sector because they couldn’t afford to pay the claims. So, while market gardening is bad for customers, it is good for the market as a whole.

What’s the point of paying for insurance if you can’t get your claim paid out of something?

The point of paying for insurance if you can’t get your claim paid out of something is that you can get a payout and that’s the common feedback.

It’s a difficult one in insurance to advise the customers as to how you get your premium down at the end of the day.

The thing is, you need to get your properties to let out. Because we’re big in the commercial let, residential let, get your properties to let out. Make sure you get a professional tenant, that would be my advice. A lot of people, what they will do is go and get a DSS tenant. So DSS tenants are readily available. But some are great.

The majority of them are great. But in the eyes of the insurer, they’re not, and you’ll pay a higher premium. So go to your letting agent, get a professional tenant if it’s a residential let, that is- that’ll cost you less for your insurance premiums going forward.  You’ll also benefit from increased levels of protection. You’ll find that with DSS tenants, a lot of insurers won’t give the damage; they’ll take the malicious damage from the tenant, even if it’s an old lady, maybe a 70-year-old lady who’s been renting for 20 years, obviously a perfect tenant. They will encounter a DSS tenant who may smoke in the house or engage in this or that behaviour. So, get a professional tenant, and make sure your letting agent is looking for a professional tenant who works full-time. It will help you save money in the long run.

How does a tenant who works from home most of the time affect the overall insurance policy?

If the tenant is a DSS tenant, they’re maybe topping up with some work, for example. What most insurers will do is they’ll come back to the broker and say like, well, how much- this is getting nosy as well. And people hate this, especially landlords. But you need to go back to the landlord and say look, is this person receiving top-ups? Are they working as well? How much money are they getting from their job, how much money they’re getting top-up from financial support from the government? And you have to go, ‘is it 50-50’? If it’s over 50-50, they’re getting more money from employment, then they’re good as professional tenants. If it goes the other way, they’re getting more money from the DSS, then it goes down the DSS tenant. So that’s the simple way they work it.

If the person was a professional like a fully professional person- and because of what’s happened due to the pandemic, many organisations are letting the person either work full time from home or part-time from home they’re still going down as a professional working tenant, as long as they have a contract in place, and they’re working. There’s no backlash there, so to speak. So no issues with that whatsoever.