Mortgage Introducer january 2020

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REVIEW

GENERAL INSURANCE

Endings and new beginnings? Geoff Hall chairman, Berkeley Alexander

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he start of a New Year always turns thoughts to resolutions and new beginnings. It may feel counter intuitive to be planning exit strategies when your business is still in full swing, but in truth a good exit strategy is a vital part of ensuring your business plan continues to perform right to the bitter end.. and beyond, depending on the plan. EXIT PLAN

Make sure you have a plan in place long before retirement becomes a reality. The key is simple, you need

to make sure your business is worth something when you exit and start discussions early – don’t leave it until you need to make a fire sale. Put customer service first. Customer reviews and brand perception are such an important asset as is evidence of long-term customer loyalty/retention and repeat/cross sales. FUTURE INCOME

If you can manage the transfer to the purchaser, perhaps by working within the new business for a while to help retain clients and get them used to the new brand, this will help as often the value of your business is based on the expected future income rather than past income. Also, don’t lose sight of how GI and protection income can add value. Whilst of course the main value is in

“The key is simple, you need to make sure your business is worth something when you exit and start discussions early – don’t leave it until you need to make a fire sale” your financial services income, GI and protection income is a scalable and credible way of creating value now and into retirement. Develop a good insurance book and talk to your GI provider about how they can support post retirement income as often there is more value in you retaining the commission income on GI into retirement rather than a oneoff upfront sale. M I

Business interruption – up in flames

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n November the beautiful Grade II listed Claremont Hotel in Eastbourne, an iconic local landmark, sadly burned to the ground. Thankfully, there were no fatalities, but in terms of the impact on the hotel’s owners and knock on impact to local businesses in the area, the loss has been colossal. The pier too, lined with sea front businesses, was closed for more than a week. The importance of having adequate business interruption for incidents like these is clear for everyone to see, but it’s not always immediately obvious until disaster strikes. Business interruption (BI) insurance covers the loss of income that a business suffers following a loss and is considered an essential cover for a large swathe of companies. The cover protects the profits whilst the business recovers, the aim being for the insured to be in the same position after the loss that they would have been in if the loss had not occurred. Businesses need to ensure they are

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The Claremont Hotel in Eastbourne was gutted by fierce flames PHOTO © ALAN FRASER IMAGES / SHUTTERSTOCK.COM

not leaving themselves underinsured when it comes to BI insurance. Too many businesses fail to appreciate how long it would take before their business would be up and running. The BI indemnity period covers from the point of loss to the point it

MORTGAGE INTRODUCER   JANUARY 2020

takes for you to be able to trade at the pre-loss level, not just the length of time it would take to rebuild, relocate or reinstate. However, crucially this is only if you have an adequate indemnity period. Policies normally cover business interruption as a result of damage to your own business premises/equipment caused by fire, storm, flood and a range of other insured events. Some policies also cover your loss of income as a result of damage to other property in the vicinity of your premises preventing access, or to premises or infrastructure of your public utility providers. Policies can often be extended to cover your loss of income as a result of damage caused to the premises of your suppliers or clients and also mechanical or electrical breakdown of your essential plant items. Every client is unique, but as a rule of thumb you should recommend a minimum indemnity period of at least 24 months and preferably 36 months. 12 months is unlikely to be adequate. M I www.mortgageintroducer.com