FINANCIAL COMPUTING
INSURANCE
HOW QUICKLY THINGS CHANGE By Mark Salter, Fort Financial Planning Less than a year ago, The Guardian reported, ‘Why low inflation is a worrying sign for the UK economy’. More recently, an article in The Independent presented a headline that likely touched a raw nerve among investors, ‘Bank decision in sharp focus amid beast of inflation warning’. Is inflation headed higher? In the short term, it’s already moved that way. With many firms now reporting strong demand for goods and services following the swift collapse in business activity last year, prices are rising – sometimes substantially. Is this a negative? It depends on where one sits in the economic food chain. Do such price increases signal a coming wave of broad and persistent inflation or just a temporary snapback following the unusually sharp economic downturn in 2020? We simply don’t know. But future inflation is just one of many factors that investors take into account. The
market’s job is to take positive information and balance it against negative information, like falling profits, wars and natural disasters, to arrive at a price every day that both buyers and sellers deem fair. Let us assume that rising inflation persists into the future. Some investors might want to hedge against higher inflation, while others might see it as a markettiming signal and make changes to their investment portfolios. But for the market timers to do so successfully, they would need a trading rule that directs exactly when and how to revise the portfolio. A trading rule based on inflation estimates, however, is just a market-timing strategy dressed in different clothes. A successful effort requires two correct predictions: when to revise the portfolio and when to change it back. It’s not enough to be negative on the outlook for stocks or bonds in the face of disconcerting information regarding inflation (or anything else). Current prices
HOW TO MAKE YOUR BUSINESS EASY TO INSURE By Dean Holloway
Over the next few months, Holloway Insurance Services will use its thirty years’ experience to share tips on how to make sure you are fully covered when you choose your insurance schedule, so you don’t face the horror of trying to make a claim and then find your loss isn’t covered under your policy. The current insurance market is hard; insurers have less appetite for risk. This means that at renewal you may find the terms you enjoyed before are no longer available for you. We shall share ways in which you can make your business more attractive to insurance companies to take on your risk. This month we look at the paperwork that insurers will often expect to see in place before they will offer to cover you. Having appropriate risk assessments, checks and rules in place will
sometimes be mandatory for your insurance cover. It may be possible to find insurance that doesn’t request them but this will cost more and will be harder to find. Some of these may be legal obligations to protect your staff. 1) Ensure that your health and safety risk assessments are reviewed every year and signed. They may not have changed, but they need to be signed to say that they haven’t changed. If someone makes a claim after an industrial accident, the insurers may not pay out if you have not got up to date assessments. We have risk assessment templates that we share with our clients so they understand what may be asked of them. 2) Check your equipment is tested regularly, think PAT testing, pressure boilers (e.g. coffee boilers), fire suppressant systems and smoke alarms. An insurer
already reflect such concerns. To justify switching a portfolio, one needs to be even more negative than the average investor. And then outsmart the crowd once again when the time appears right to switch back. Rinse and repeat. The evidence of success in pursuing such timing strategies – by individuals and professionals alike – is conspicuous by its absence. Some of the recent concern regarding inflation appears linked to substantial increases in government spending and government debt load. Determining the appropriate level of each is a contentious public policy issue, and we don’t wish to minimise its importance. But historical news headlines suggest these concerns are not new, and the expected consequences of these issues are likely already reflected in current prices.
The future is always uncertain. But as economist Frank Knight observed 100 years ago, willingness to bear uncertainty is the key reason investors have the opportunity for profit. Investors will always have something to worry about; the possibility of unwelcome or unexpected events should be addressed by the portfolio’s initial design rather than a hasty response to stressful headlines in the future. As research from Fort Financial Planning highlights, simply staying invested can help investors outpace inflation over the long term.
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may not cover you if these are not in place and may request to see certificates.
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FOR BUSINESS newsletters, Compliance
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Communication to a more competitive quote for y 3) Ensure you have a regular, www.hollowayinsurance.co.uk Proud Proud to tobe beinsuring insuringand and signed cleaning cycle. LeavesInsurance local localbusinesse business Guidance info@hollowayinsurance.co.uk in gutters that cause flooding, Telephone: 206588 or 07341 663783 Telephone: 0146001460 206588 or 07341 663783 01460 206588 blocked drains, cooker info@hollowayinsurance.co.uk extractions deanholloway@gauntletgroup.com systems furred up with fat will all to the ceiling. Fire doors must be reduce your chances of pay-out. kept shut and not propped open 4) Clear staff policies that are easily and fire drills rehearsed regularly. accessible to staff. For example: Next month we shall look at expectations of your drivers, no common policy exclusions. Look smoking near gas storage units, out for them and consider if it moving and handling training is something you really need which are all regularly updated covered. In the meantime, and signed by the staff. do visit our blogs page where we share more useful 5) Careful storage of equipment; information for businesses (www. consideration of possible factors hollowayinsurance.co.uk/blogs) that may include items not being and search YouTube Yeovil stacked against the building due Chamber Business Fair for our to fire risk; most insurers stipulate they must be stored several metres presentation. away. Items cannot be stacked up
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