The financial stability rating of the insurance company

It is important to understand the financial stability rating of the insurance company. Many nurseries have been affected by Gable Insurance being placed in liquidation on 21 November 2016. So, what does this mean for nurseries insured with this company and, more importantly, what guidance is there to ensure nursery owners do not find themselves in such a situation again?

Any broker placing clients with Gable Insurance will have had to advise their clients that their insurance needs to be replaced and that potentially any payments they have made will not be refundable. This is a double blow to many businesses, but when nurseries are facing so many other challenges affecting cash flow, it could hit them very hard.

So, it is vitally important that when nurseries are choosing their insurer, they take time to consider the following:

1. The financial stability rating of the insurance company

The most objective measure of an insurer’s financial security, this is determined by an independent rating agency. A strong rating through agencies such as Standard & Poors gives a policyholder a clear idea of an insurer’s ability to pay claims. Unrated insurers such as Gable Insurance are an unknown quantity.

2. The fine details of the policy wording and what conditions and exclusions have been applied

It is essential all nurseries fully understand their obligations and, if they cannot comply, they discuss this with their advisor.

3. The Insurance Act 2015 alongside the Financial Conduct Authority

These have put a much greater obligation on brokers and insurance advisors to provide clear, precise advice to their clients. Traditionally, insurance has been arranged by ‘advised sales’, where a firm gives advice to customers on how a specific policy suits their needs. However, a number of advisors are now opting to sell insurance on a non-advised sale basis, which means they will only provide information to a customer – no advice – leaving them to make the decision.

4. The need to regularly review the sums insured when you take out or renew your policies

Read the documents sent by the insurers carefully in case of changes to the conditions of the policy. Businesses do not stay the same. So, your insurance policy will need changing. This needs to happen in the middle of the year, for example, if you buy new equipment or are increasing fees.

5. The limits of indemnity applied to your public liability cover

Claims’ costs are constantly rising and if a young child sustains a lifechanging injury and the nursery is considered negligent, the claims payment could be substantial.

6. The implications of buying your insurance online

This can be very helpful when you are trying to arrange insurance outside working hours, but the obligations on the nursery are that much greater and it is worth spending time studying the terms of the provider.

7. The small print

This often has the information you need in order to make objective decisions.

It is sad to see that a number of single nursery settings and nursery groups are being sold these days. But, on the other hand, for those nurseries that are acquiring them, it means growth. We would strongly recommend that, whatever your situation is, you do not forget your insurance needs. There are many options for nurseries to choose from when purchasing insurance, but whatever
method you decide on, do not underestimate your requirements and make sure you spend time getting this right. If it is wrong, then the insurance isn’t worth the paper it is written on – and that can have a dramatic effect on any business.