Whether you’re a CFO, founder or a senior leader within a scaleup, you’ll know scaling isn’t just about growth. It’s about how you can take advantage of economies of scale, using a little to achieve far, far more.
Insurance shouldn’t be the exception here. The last thing you want is for your insurance premiums to increase in line with your revenue. And yet this imbalance is exactly what many scaleups and fast-growth businesses experience.
Finding those economies of scale when it comes to insurance can take some strategy thinking about what you need from your cover – and more importantly, from your broker. With that in mind, here are the top tips and hacks we’ve learned over the years to reduce your scaleup insurance spend.
Some quick, common fixes
Before we dive in too deep with broker relationships and strategic thinking, it pays to start with a few broader pieces of advice. You might have already heard some of these before, but it’s worth looking at what impact these quick wins can bring.
Align your insurance renewal dates
It’s easy to see why renewal dates tend to end up scattered across the year. After all, few companies buy each of their insurances at the same time.
Maybe it was June when you first purchased employers' liability. January brought cyber insurance. April will forever be associated with Marine Cargo and Business Property. And now you have a handful of different renewal dates to keep track of.
The result is you’re tied up in buying insurance when you’re told to buy it. And you need to allocate team members – or your own precious time – to insurance matters several times a year.
You don’t get economies of scale like this – and even if it doesn’t affect your premiums, it’s costing you unnecessary time and money. Aligning insurance renewal dates is an easy win.
Consolidate your insurers
When buying insurance personally, it makes sense to scout for the cheapest deals on an item-by-item basis. Your individual purchasing power is so limited that you’re not going to have much luck negotiating a unique discount for customer loyalty. Your car, home, and life insurance are all going to be kept separate.
But the same isn’t true in business. Often, the more you purchase from one insurer, the more competitive the deal is likely to be. That’s particularly true as you grow and your purchasing power increases.
As an added bonus, it helps avoid duplication and overlap in policies, so you aren’t accidentally insuring against IT downtime with both your cyber and business interruption policies.
That’s not to say you shouldn’t consider opting for multiple insurers, but you do need to be deliberate about it and not automatically default to splitting your bill when you could be saving money by consolidating.
Consider the risk you can afford
Every scaleup company is going to have a different appetite for risk in insurance – and a different capacity for loss.
For example, you could be a very successful fintech that’s completed the most rigorous checks on your cyber security (and acquired the most prestigious certifications), and so have chosen to raise your excess. Although you can’t 100% guarantee security, you have enough checks and balances that you’re willing to risk it.
Of course, if you already have plenty of risk on your balance sheet, you may want to be more cautious with your excesses – and that’s fine. Ultimately you need your insurance to give you the cover you need, not just the price point you want.
Lesser-known hacks for scaleup insurance savings
Quick wins are always useful, but what about when you’ve gone through consolidating insurers and renewal dates? That’s when it’s time to look for the changes you can make that aren’t as widely known, but can possibly make a much greater impact on your insurance savings.
Change your mindset – and appoint a broker mid-term
Here’s the process that many Series A-funded companies opt for:
- They wait until they’re a month out from renewal
- They ask for a quote from three or four brokers
- They choose whoever finds them the best deal
In their minds, this process is a step up from their startup days when they worked with a typical SME broker or bought insurance online themselves.
But it’s not optimal. Not at all.
If you’ve got three different brokers trying to get the same quote, they’ll end up bumping into the same underwriters – in the scaleup world there are only so many.
The underwriters aren’t going to be overjoyed when the third broker comes to them, with a slightly different approach, asking for a quote for the same company. More than likely, they’re going to think this company is treating the whole process too lightly – as if it were a haggling process at a market stand – and their offer will reflect this.
What you actually need to do might seem a little counterintuitive but we’ve seen it create far, far better results:
- Appoint a broker mid-term, well ahead of renewal
- Give them time to explore options e.g. the lifting of exclusions, raising the limits of coverage etc.
- Let them go to the underwriters with a more strategic pitch
If the broker recommends it, you might even want to let them bring you into the room (we call this a tripartite insurer relationship) to help put your company on the underwriting map for the right reasons.
Go with a specialist scaleup broker
While you might hear people say you should go with a broker that understands your industry, they don’t often say you should go with a broker that understands your journey – the scaleup journey specifically.
Yes, if you’re working in deep tech or AI, pick a broker that knows how to get good terms for that industry. But you’ll also want a broker that knows they need to be as nimble as you are, and plan for a 12 month period of scaling. That might mean linking you up with insurers who will cover you as you expand to the US or increase your data records.
Too often, traditional brokers don’t have that specific understanding of the scaleup journey. Their discovery phase amounts to a basic form that doesn’t go far enough to uncover what sets scaleups aside from other kinds of business.
However, a broker who specialises in insurance for scaleups will be able to assess your business’ main exposures and prepare to fend off underwriter questions. On top of that, they will be able to go to specialist-insurers they already have relationships with – ensuring your company gets more than a cursory glance and a rate that errs on the side of underwriter caution.
Think ESG
Finally - and this is more of a long game but really important nevertheless - you want to prioritise ESG in your operations, and find a way to bring it to the forefront of an insurer’s attention.
Our joint study with Aviva shows that B Corps and other businesses that score high on ESG are more resilient and have better risk factors than other businesses. So if you’re putting in the work, bring it to an insurer’s attention. They’ll often adjust their premiums accordingly.
For instance, we worked with the Days Brewing Company after they received a big injection of funding. Their B Corp status played a big part in us helping them save over £3,000 on their employer’s liability and commercial insurance policy .
It was a similar story with Wild, though this time we actually supported them to get B Corp status (having achieved the same B Corp certification ourselves). We could already see Wild had a spectacular ESG profile and they were a prime candidate for making it official.
As a result, we were able to overturn insurers that had declined to provide a quotation. And we were able to save them 35% on their policy.
What next?
If reading these insurance savings hacks has got you thinking about changes you need to make to your scaleup’s cover, the next step is to speak to a broker who understands the journey you’re on and the proactive support you need along the way.
For more thoughts on how to find brokers suited to your scaleup journey, check out our article, “Broker not talking your language?”.
Or if you’re ready to start talking to a broker that specialises in supporting scaleups along their journey, book a 30 minute call with our team.