Mid-year is almost upon us yet again and Barley Insurances Limited is pleased to be celebrating it’s 4th birthday on 6 July 2002. We would therefore like to thank you for your support and the opportunity to contribute to your ongoing personal and business well-being.

LAPTOPS

As most of you will be aware, whenever I visit your premises I always discuss laptops, breakdown of computers, loss of software, etc. You would have heard over the past couple of months that insurers are now restricting their cover on laptops and some are no longer covering them outside of business premises.

We also had another issue with one of our clients whereby the software that is utilised can only operate if there is a small ‘signature box’ connected to the laptop. Thus the software will only operate if the signature box is in operation and plugged in. Unfortunately, when you lose your laptop you also lose your signature box. Therefore the cost of obtaining the software package again is controlled by the purchase of the signature box. The signature box with the software, in one particular case cost US $1,600 to replace and we need to take account of this when insuring these specific items.

We also draw your attention to the necessity to put your laptops away in the boot of your car and lock the vehicle. The aforementioned client had his laptop in the carry bag on the back seat of the vehicle. Although the vehicle was locked and alarmed, the burglar smashed the back window and took the item. Laptops are very tempting!

RISK MANAGEMENT

With escalating premiums Risk Management has come even more to the fore than it has been in previous years. As you are no doubt aware, although the New Zealand insurance market was not directly affected by the immense losses of 11 September 2001, New Zealand insurers reinsure offshore. The reinsurance market is suffering in the aftermath of this loss and is recouping its losses by increasing premiums back here.

There are various methods of minimising premium increases:

Self-insuring (generally only an option for large corporates).
Raising the excess and taking on more risk yourself.
Reducing the level of cover and implementing a stronger risk management programme to minimise risk.

The minimising of risk is often a case of implementing simple common sense, but it does take time. A good risk management plan needs to incorporate a ‘disaster recovery programme’ which addresses all contingencies. For smaller home run consultancy businesses it can be as simple as taking regular computer back-ups and keeping them
off-site.

In essence you need to look at the worst case scenario, identify what you would need to get your business running again, then put in place contingency plans to make this possible as quickly and easily as possible. For a larger business this might entail a reciprocal agreement with a competitor to perhaps utilise equipment or stocks (think of the ease with which Tip Top continued operating following the fire at their Kingsland plant), copies of operating manuals, essential accounting and computer backups kept off site. In this day and age of passwords and PIN numbers, a record of regularly used email addresses, logins, etc should be kept somewhere safe in the event that this information is lost in a theft or fire. (We discovered that this could be a problem when we got zapped by a computer virus).

Insurance is only part of the equation in keeping a business running in the event of a disaster. Using as an analogy a simple algebraic equation is 50% + X = 100%. The ’x’ factor relates to the risk management, ie if we have a risk management plan in place this plan enables us to utilise the finance obtained from the insurance policies in an efficient and effective manner to allow reinstatement of the business as quickly as possible.