Income Enhancement? …Yes!
28/07/2021
Income Enhancement? …Yes!
Instinctively, when asked to define the quality of one’s insurance package, an operator will associate its quality to the size of recovery, and generally feel that bigger is better.
Is that really the case? As for most topics, it depends.
Of course, having the comfort that the worst-case scenario is covered is great and mainstream covers are perfect for the purpose. However, in a market environment that is very competitive, and improving in many segments, providing “only” for worst-case scenarios can fall short of what’s really needed.
After all, what good is it to have cover for up to 180 days of lost income if losing the first 14 days will affect the operations for months to come?! Even more so, in a high market.
What is more relevant to one’s finances: knowing when recoveries start or controlling when losses stop?
Do you control when your losses stop?
Despite sounding rather banal, this question aims at shifting the focus of a ship operator from the size of potential recovery to the income enhancement that is achievable through the transfer of known and certain losses, usually expressed as deductibles or exclusions under the various mainstream policies.
We see this approach becoming increasingly conventional and relevant.
Traditionally, risk assessment focused on two variables: the financial effect of an event and the likelihood and frequency of the event occurring.
A third variable is acquiring a fast-growing dimension:
Basically, how fast do I feel the (financial) pain, and can I control that?
Be it for the stock listed corporation or the small family operation, the inclusion of this third variable into the regular risk management processes and procedures helps contextualising the most relevant exposures, determine how quickly they have to react to casualties and boost their company’s income in doing so, for their shareholders’ interests and their own.
As a dedicated niche marine insurance provider we propose protection for primary layer delays, helping operators control the speed at which they will stop losing earnings and quantifying the income boost that can be achieved.
Our Primary Layer Delay cover provides a solution for losses that the mainstream covers exclude expressly or through a high deductible, i.e.: the losses that will directly affect net earnings.