So before deciding whether a long-term contract is a good idea or not, do you think who will benefit the most – you, your insurance broker or insurance? Is it a good idea to sign a long-term contract in exchange for a discount on your business insurance premium? By signing a long-term business (LTU) or a long-term agreement (LTA), a village house agrees to renew its policy for a period of 3 or 5 years with the insurer that offers the business for an insurance or section discount. The lobby is then linked to the company, provided that the insurer does not change the rates or changes the conditions applicable to the policy. As a general rule, a 5% premium is allowed for a 3-year contract and 10% for a 5-year contract. However, if your insurer increases rates or changes its terms for any reason, including the claim experience or only a strategic rating review, the company is considered to be broken and you can refer your company to another insurer in the event of a renewal. If you`re thinking of reaching a long-term deal, it`s important to read the fine print and see exactly what you`re getting. I spoke this morning with a business manager who had entered into a five-year long-term contract (LTA) on the company`s business insurance to save money. In other words, they had signed an agreement that promised to stay at least five years with the same insurer (and probably the same insurance broker). A reduction of 5 to 10% on insurance premiums due during this period was probably agreed for this loyalty. In today`s marketplace, when insurance companies compete and offer discounts for new business, loyalty cannot always be rewarded. I believe that long-term contracts benefit insurers and brokers much more than their clients. So, as an industry, do we fail our customers? I advise you not to change your insurance every year – it stifles competition and interest in the market – but I strongly advise you to protect your freedom of movement. Your broker should have confidence that he can get results from year to year, not just every 3 years. A valid business means that the lobby is effectively bound and cannot easily switch to another insurer that offers more advantageous terms until the end of the business.
This also applies if you are not satisfied with the service you receive. It is also important to remember that the business is actually between City Hall and the insurer and not the broker or intermediary, so if you call the services of an insurance broker and change the insurer that provides your insurance coverage, then the initial LTU becomes null and void. If the lobby chooses to break up the business by switching insurers in the middle of the 3 or 5-year period, it could refund the rebate the company had received in previous years. The standard of the insurance industry is to assess those of LTU, if they exist legally. This means that the business is effectively tied up and cannot easily switch to another insurer or insurance broker who offers more advantageous terms until the end of the five years, even if they are not satisfied with the service they receive. However, if the insurance company decides to increase the premium, for example because of a bad experience of claims, it can generally get out of the LTA easily. In theory, the premium will remain at the same level for the agreed period, regardless of changes to the policy, such as. B increases in insured amounts or the acquisition of additional sections. The ability to change within a specified 12 months is an undeniable advantage in negotiating bonuses, fees, coverage and service.