Employee or Contractor? What’s Riskier for Your Business?

If you are planning on expanding your workforce, deciding whether to hire a new employee or contractor can be difficult. There are, of course, various benefits and risks associated with each of these options that could significantly influence your final decision. Before going ahead with your preferred choice, it is crucial that you consider these and fully assess the types of recruitment available to your business and the risks that each of them brings. By doing this, you will be able to discover the ideal solution for your distinct needs.

 

Hiring a Contractor

Contractors are becoming an increasingly prominent group in the job market, with almost one-third of Australians preferring the flexibility of freelance work. By temporarily recruiting a contractor, your business will likely be able to save on employment costs. While an employee may have a lower hourly rate than a contractor, you are also required to cover their holiday pay, insurance, sick leave, equipment and the like. This means that, in the long-term, the total costs for hiring a contractor will often be less than those of an employee.

Contractors provide businesses with a more flexible employment solution, being that they can be hired on an as-needed basis. Because contractors are specialised in the service they are offering they also, typically, require less management when completing assigned tasks.

It is, however, important to consider the difficulties that hiring a contractor can pose. When working as a contractor, it is not uncommon for individuals to be employed by multiple companies simultaneously. Because of this, they may fail to prioritise business objectives and appear less committed or loyal than an employee. It is also vital to note that, while they are required to follow set guidelines, contractors can often decide how best to complete the task for which they have been hired. For instance, if they prefer to work outside of normal work hours, this could negatively impact your communication capabilities.

Each business has different needs, priorities and objectives. As such, hiring a contractor will not always be the perfect solution and, in many cases, companies are better suited to alternative employment options.

 

Hiring an Employee

By hiring employees, you can support the development of a strong, loyal and dedicated team of individuals who have a shared vision for your business. Employees are often more invested in the long-term success of the company at which they work than an external source would be. With a comprehensive understanding of organisational processes, they also play a significant role in ensuring all company procedures continue to run smoothly.

By hiring an employee, as opposed to a contractor, businesses are able to keep everything in-house. This means that, during the day-to-day operations of your company, you can efficiently manage workloads and lead staff all while keeping private information secure.

While hiring an employee can offer many benefits to your business, there are still numerous challenges with this type of employment. Significant time and money must be invested in employees to ensure they are well equipped to perform their role, while also having access to required equipment and resources. You also risk hiring someone who is not a good fit for your business, which can often be difficult, costly and time-consuming to manage.

Regardless of whether you choose to hire an employee or contractor, there will be various insurance considerations that will need to be taken into account.

For reliable insights into how each alternative will impact your insurance and risk management solutions, speak with your insurance advisor.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Does Your Property Insurance Cover You for Airbnb?

Airbnb has over 650,000 hosts worldwide and, if you are one of them, ensuring you have the right insurance for your property is crucial.

A global company, Airbnb helps members arrange temporary accommodation solutions in over 191 countries. This online marketplace makes board and lodging, homestays and travel experiences readily available to users, all while assisting hosts in gaining additional value from their property.

The substantial growth of the sharing economy in recent years has led to the emergence of an incredibly diverse, widespread sector that can offer immense benefit to both guests and property owners. It is important that, in response to this advancement, cover providers continue to adapt and refine their products to meet modern demands.

In a recent survey, it was found that 54% of accommodation hosts who have at least one Australian property listed on Airbnb were unsure about whether they had adequate cover. By determining the extent to which your property is protected against unexpected events, you can proceed with home-sharing activities in confidence.

Once a property has been listed on Airbnb, the owner is offered Host Protection Insurance at no additional cost. It is, however, essential to note that this cover is not as comprehensive as a Home and Contents or Landlords Insurance policy. The cover provided by Host Protection Insurance is not all-inclusive and, because of this, may still fail to account for particular incidents.

With Host Protection Insurance, you can gain up to $1 million in liability coverage for each occurrence involving property damage claims or third party bodily injury. However, in most cases, you will not be covered against malicious damage, theft, damage resulting from natural disasters, auto accidents such as vehicle collisions and any consequential legal expenses.

Those who explore alternative cover options need to ensure that their Home or Landlord Insurer is made aware of their properties use as an Airbnb. If such information has not been disclosed then, regardless of whether an incident involves Airbnb guests or not, the insurer holds the right to decline any claims lodged by the host.

It is not uncommon for insurers to offer policies that do not cover properties that have been listed on Airbnb. As such, when searching for your perfect insurance solution, you may find seeking professional advice and assistance particularly advantageous.

For more information, get in touch with your insurance advisor.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Cladding Issue Causes Major Rift Between Insurers & Government

Australian insurance providers are under rising pressure amidst calls for them to help rectify the combustible cladding crisis.

After the recent discovery of severe defects in multiple apartment buildings, the Victorian Cladding Taskforce has suggested insurers contribute funds towards their repair. They believe that, by addressing the issue now, insurance providers will reduce their exposure to future claims involving the flammable cladding. The Victorian government are, for this reason, adamant that a positive contribution from both parties will achieve a mutually beneficial outcome.

The Insurance Council of Australian (ICA), however, believes that insurers are not responsible for the compensation and rectification costs of the disaster. Instead, they have proposed that those who caused the issues should be held accountable. The ICA argues that insurers did not build, certify or have any input in the construction of the affected buildings and, thus, have no direct obligation to resolve the crisis.

 

The Impact of this Issue on Insurance Premiums

Since the identification of these severe defects, insurance premiums for surveyors, engineers and architects have increased significantly. In some cases, professional indemnity insurance is now costing individuals up to 500% more than prior to the cladding crisis. Often, these premiums also include broad exclusions that aim to minimise the exposure of insurers.

Those impacted by the soaring costs and growing list of restrictions believe that to combat this financial burden, they will need to pay their staff less and charge more for their product or service. Helen Lochhead, the national president of the Australian Institute of Architects, stated that those who struggle to afford these rising premiums might even be forced to close.

While, in one case, owners of an affected Melbourne apartment building were awarded more than $5.7 million, such action is not always possible. Numerous companies involved in the construction of impacted buildings were purely created to complete that particular project and, after its conclusion, ceased to exist. Investigations are ongoing and, until a viable solution has been found, unit owners will be prohibited from selling their apartments.

The flammable cladding crisis is still yet to be resolved and, to protect the Australian construction industry, swift government action is crucial. The Victorian government have announced that they will be contributing $600 million towards fixing buildings across the state that contain the cladding. In the past five years, owners of affected Sydney buildings have also collectively received at least $30 million.

Obtaining the appropriate insurance for your needs should be a priority. By speaking with an insurance professional, you can ensure you are aware of risks in your industry and keep up to date with the latest risk management strategies. A qualified broker can also help you accurately define which questions to ask in uncertain circumstances and can act on your behalf when dealing with insurers.

If you have any queries relating to your building’s cladding or your other insurances, don’t hesitate to get in touch with your insurance advisor.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Avoiding Debt: Practical Ways your Business can Plan for a Prosperous Future

Avoiding Debt: Practical Ways your Business can Plan for a Prosperous Future

More than 60% of small businesses in Australia close within their first three years. This is unsurprising as small business owners face a number of challenges and threats every day.

One of the most common struggles businesses face is cash flow. If you don’t have enough money available to pay your staff and suppliers or purchase more products, your entire operations will grind to a halt. Cash flow problems can be the result of a number of circumstances. Overheads can quickly add up, from your office space to employees and stock.  Add to that clients not paying invoices on time, tax and other additional costs, and cash can become tight.

It’s easy to slip into the borrowing mentality, which will keep you afloat for the time being, but this can amount to significant debt that can be difficult to recover from. The following are some of the steps you can take to avoid going into debt, and at the same time, improve trust in your clients, customers and suppliers when it comes to payments.

 

Carry out Credit Checks on Clients

Before working with a client, a credit check can help you ensure that they are solvent enough to pay their fees to you. This can be done easily through Equifax’s Business Credit Express or Illion Express, which are databases of real-time Australian consumer and business information. For a small fee, you can find out all the information you need in relation to a company’s credit history. ASIC’s Business Checks app can also be useful in the client evaluation process as it takes you through a practical and easy checklist to authenticate the information that a business provides you with.

 

Ensure You are Invoicing Properly

It is vital to ensure you are sending out your invoices correctly. The Australian Government website provides practical details on how to create an invoice, what should be included, and different types of invoices that you can send as well as other useful information. The next step is to ensure you are accurately tracking what invoices have been paid, as nearly three-quarters of all business invoices are paid late.

 

Set Up Debt Recovery Procedures

Late payments can result in a “debt recovery” scenario. You should review the terms of the contract for payment conditions and debt recovery options so that you are aware of your options if this happens.

There are a few things that you can do to recover your payment in this situation. First, send an initial reminder for payment as well as several follow-ups. The Victorian Business website has templates available for all steps of this process. If you still haven’t been paid, you may need to consider using a debt collection agency or service. However be aware that this is likely to severely damage your relationship with your client, so should only be used as a last resort.

 

Explore Your Insurance Options

While there are precautions that you can take to ensure your business stays solvent, there is the possibility that your business may still end up in debt.  There are certain insurance covers that can protect your business from debt that can temporarily or permanently close your doors.

The most effective cover to manage and reduce exposure to bad debtors is Trade Credit Insurance. Trade credit insurance protect debtor assets on the balance sheet. It does this by covering the policy-holder for losses incurred as a result of:

  • The insolvency of a customer
  • Buyers refusing to accept ordered goods
  • Customer default in paying an outstanding debt

The cover can also be extended with Export Credit Insurance.  This covers not just debts but other commercial risks of trade and political risks that may prevent payments being made, such as:

  • Failure of a bank to honour a letter of credit
  • Repossession of assets
  • Wrongful or unfair calling guaranteed, bonds or contract warranties

 

If this is an issue that you think may affect your business, speak to your insurance advisor to find out more about your insurance options to ensure you stay profitable into the future.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

How Insurance Fraud Can Impact Your Business

How Insurance Fraud Can Impact Your Business

Insurance fraud is estimated to cost up to $2.2 billion every year. Many consumers ignore these figures, assuming that insurance fraud only affects the big insurance companies. The truth, however is that insurance fraud directly impacts the premiums for honest policyholders. In order to remain profitable, insurers have to pass the costs that they lose through to their clients, who see higher premiums, higher excesses and policies with more exclusions.

Some types of fraud are deliberate while others are committed without the person realising. Types of insurance fraud typically fall into the following categories:

  • Non-Disclosure: This fraudulent behaviour can be done deliberately or not.  Non-disclosure basically means that you haven’t revealed certain pieces of information to an insurer that would potentially affect their decision to cover you or to pay out a claim. For example, if you are applying for business property insurance, you may neglect to mention that your building has flammable cladding in its structure.
  • Deliberate Fraud: This is a premeditated and calculated behaviour that a person employs in a deliberate effort to mislead an insurance company and receive an insurance payment. For example, if someone sets fire to property or fakes a theft in order to receive an insurance payout.
  • Exaggeration:This occurs when someone makes a claim and exaggerates the amount of damage or cost of the loss to receive a larger claim payout.

How to Avoid Committing Insurance Fraud

Obvious deliberately committing insurance fraud can be stopped easily. There are also steps that you can take to avoid accidentally committing insurance fraud:

  • Be Honest: Never exaggerate the value of something or the extent of the damage caused. Also, make sure you tell your broker or insurer anything that you think may be relevant in the event that you have to claim.
  • Read Your PDS: Your Product Disclosure Statement details the things that are included and excluded in your policy, as well as circumstances that render your insurance void. If you know clearly what these things are, you can make sure you avoid them. Your insurance broker will be able to go through this document with you and highlight the important points to note.
  • Read the Duty of Disclosure: Your broker will provide you with a Duty of Disclosure document, which will detail the key information that should always be disclosed to your insurer. They will also help guide you through the entire process while you are obtaining cover or in the event that you need to update business details.

The insurance industry as a whole is dedicating significant resources and investing in ways to combat insurance fraud.  New technologies and software programs have been developed to identify fraud, backed up with specialist claims teams who investigate these matters.

There is also an organisation called the Insurance Fraud Bureau of Australia (IFBA) that works with insurance companies to notify them of information related to possible fraud.  In addition, the IFBA helps develop strategies to reduce fraud in the industry, which helps protect honest consumers from bearing the brunt of the costs.

By sourcing your insurance through a broker, you are less likely to inadvertently commit insurance fraud. In order to avoid fraud through non-disclosure, it’s important to keep your insurance advisor up to date with any change in your business’ circumstances.

For more information on insurance fraud and how to avoid it, get in touch with your insurance advisor today.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Is Your Business Underinsured?

Is Your Business Underinsured?

1 in 10 Australian small businesses with insurance don’t have enough cover to protect themselves.

Many Australian businesses are underinsured, which gives them a false sense of security and leaves them exposed to potential risks in case of an incident.

Business owners and companies who become complacent with their insurance often don’t seek professional advice. Instead, they are tempted to choose policies without full consideration, often online for convenience, and pay the premium monthly, assuming they’re fully covered. In some cases, business owners don’t even know that they’re not properly protected until it’s too late. When disaster strikes, they find out that the insurance policy they’ve purchased doesn’t cover them for the event, or their insured amount is much less than they actually need to get the business back on its feet.

Read this guide to underinsurance for more information on underinsurance and the steps you can take to avoid it – Underinsurance Guide.

Insurance is a key part of reducing your business risk and ensuring it succeeds into the future.  Seeking professional advice from your insurance advisor can help ensure your business is protected.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Ways to Reduce Your Business Insurance Costs this Year

The Australian insurance market is starting to enter the ‘hardening’ phase.  This means many business owners can expect more expensive premiums, higher excesses and more narrow coverage. While there’s not much you can do to stop the hardening market, there are certain steps you can take to ensure the market hardening has less of an impact on your business’ bottom line.

What Is a Hard Insurance Market?

The insurance market is driven by the availability of insurance.  If the market has significant capital coming in, it’s easier for businesses to get cover.  This is known as a ‘Soft Market’.  In a soft market, the consumer has more power as insurers will chase business.

A hard market is the opposite.  With decreased availability of capital, insurers have to be more stringent.  This means higher premiums, lower policy limits, bigger excesses, wider exclusions, narrower policy coverage and less competition between insurers.

Certain parts of the Australian insurance market are already showing signs of hardening.  High-risk property, for example, property with building issues is becoming harder to place.  Businesses with a history of losses are also finding it harder to get coverage they want.

How to Ensure Your Business is Prepared

There are certain things you can do to prepare your business before the market hardens:

  • Secure higher policy limits or broader cover in advance, if you think you may need it later. For example, if you currently have cover for $5 million and you know you will need to increase it to $10 million, it may be easier and cheaper to get it now.
  • Factor in the increased costs. With the cyclical nature of the insurance market, you can save for the inevitable, while you enjoy reduced premiums.
  • Work with your insurance advisor. No matter what stage of the cycle the market is at, your insurance advisor will understand both the market and your business. They also have long-term relationships with insurers, which helps them secure the best cover for your business and its circumstances in any market condition. as well as being able to advise on likely future changes to insurance costs.

If you’re concerned about the costs of your insurance premiums going forward, speak to your insurance advisor.  They will be invaluable in assisting your business in a hard market and will act as your advocate if a claim is rejected.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

The Evolving Threat of Cyber Crime: Is Your Business Next?

In the past year, the number of reported Cyber attacks have damaged more networks and exposed more consumer data than ever before.

While there are certainly more attacks occurring year on year, more stringent laws have been put in to place that mean greater transparency is necessary when a breach does occur. This has meant that there have been may more organisations having to disclose a lot more breaches than ever before. With Cyber risk at the top of mind of many Australian business owners, it’s important to ensure you are prepared.

Evaluating the Risks of Cyber Threats

The risks of cyber threats will exist as long as you rely on computers and online programs in your work.  Cyber criminals look for information and data on your business, employees and customers. They develop a number of ways to exploit weaknesses in your business such as:

  • theft or unauthorised access of hardware, computers and mobile devices
  • infect computers with viruses and malware
  • attack your technology or website
  • attack third party systems
  • spam you with emails containing viruses
  • gain access to information through your employees.

It’s important to be aware that human error is most often the avenue through which an attack will occur.

The following can help minimise the risk of cyber crime as a result of human error:

  • Develop clear policies and procedures for your business and employees. Outline the security measures you have put in place on how to protect your systems and information assets.
  • Ensure employees are trained.  Consider using video in training, showing an attack or attempted attack as a case study to share with employees.
  • Try to educate corporate clients about the risks of business email compromises.
  • Educate your C-Suite and Board of Directors with regular cyber threat updates to ensure they don’t let their guards down.
  • Create a disaster recovery plan. If you base this on an existing model, the work has already been done for you.
  • Conduct a fake attack on employees by sending an unsolicited email.  If the employee clicks the link within the email, it will expose vulnerabilities in the business and highlight where additional training may be necessary.

Other cyber risk management strategies include:

  • Keep computers, website and Point-of-Sale (POS) systems up-to-date with all software release updates or patches.
  • Ensure all important data and information is backed up regularly to minimise the damage in the event that a breach occurs to your systems.

Some of the challenges in protecting businesses from cyber risks include budget restrictions, out-dated legacy systems, staff mobility, and lack of time to implement solutions.  There are certain things that you can do to implement a risk management plan to protect your business from cyber crime.

The threats posed by cybercrime will continue to evolve as technology does.  So it is important that your organisation continues to adapt and update strategies. their strategies. Cyber Insurance can also help to protect your business. Speak to your insurance advisor to see if this would be a suitable option for you.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Managing Your Business Risk In 2019

The recently released Allianz Risk Barometer report identified ‘Changes in Legislation and Regulation’ to be the top risk for Australian businesses in 2019.  According to the report, this year companies are most concerned about increasing legislation and more onerous compliance process.

The statistics released in the report were as follows:

  • Respondents rated ‘Changes in Legislation and Regulation’ as the number one risk (at 36%), up from the third spot last year (with 28%)
  • ‘Business Interruption’ remains in second place with 32%
  • ‘Cyber Incidents’ has moved down from the number one spot in 2018, to position 3 (at 30%)
  • The impact of ‘new technologies’ ranks as the fifth highest business risk in Australia for 2019

While the risk of cyber incidents may have moved down in the rankings for 2019, it is still a major concern for Australian businesses. 61% of Australian respondents identified cyber incidents as the cause of business interruption that they fear the most.

Technology is becoming an increasingly complex issue for Australian business owners.  When asked which new technologies are the most useful for a company, 80% of respondents answered artificial intelligence.  However, 66% of Australian respondents also identified Artificial Intelligence as the technology that posed the greatest risk to a business.

Allianz Global Corporate & Specialty Pacific’s CEO Willem Van Wyk said that the rapid pace of change is influencing business risk concerns. He stated:

“The increased pace of change, both in terms of legislation, regulation, market disruption and new technologies, is heavily influencing business risk concerns within the Australian market.

In light of the most recent report, Van Wyk advised Australian organisations to plan ahead and prepare for a number of disruptions to their business.  These disruptions can come from with in the business and its operations, or from suppliers or new competitors.

Van Wyk warned “Regardless of the cause of disruption, the financial loss for companies following an event can be enormous.”

He said that new risk management solutions, analytical tools and partnerships can help business owners better understand and minimise the number of risks faced by businesses so that they can prevent losses before they occur.

If you’re concerned about the risks facing your business in 2019, or need some advice on risk management strategies, don’t hesitate to get in touch with your insurance advisor.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Quality Financial Advice

Royal Commission Highlights Need for Quality Financial Advice

The Royal Commission into misconduct in the Banking, Superannuation and Financial Services Industry uncovered disgraceful behaviour from some of the biggest names in these industries.

The findings of the Commission created fallout from scorned clients, and sparked conversations across the industries about moving forward.  The MetLife Adviser-Client Relationship Report (2018) looked into how the Commission reports have affected consumer perceptions of the industries and their advisors.

MetLife Australia head of retail sales Matt Lippiatt said, “the Royal Commission has put the spotlight on the need for quality advice and its enduring appeal.”

According to the MetLife Report, consumers and SMEs want to establish a genuine relationship with a financial adviser they can trust.  They are looking for an adviser who goes the extra mile to listen to them, understand their needs and communicate regularly and clearly.  With the right insurance advisor, you can be sure that these needs are met.  Having an insurance advisor in your corner also has a number of additional benefits:

  • Get the Right Advice: As a trained specialist in insurance practices, your broker will give accurate advice and provide the most appropriate insurance solutions to meet the individual needs of your business.
  • Reduce Business Risk: Your insurance advisor won’t just select the most appropriate insurance policy for you, they’ll also help with overall risk management in your business.
  • Keep Policies Up to Date: Your broker will keep up to date with any legislation changes that may result in necessary policy changes.
  • Claims Help: In the event that you find yourself having to make an insurance claim, your advisor will deal with the insurer on your behalf to work to an outcome that you’re satisfied with.
  • A Trusted Business Partner: Your insurance advisor wants what is best for your business and will work together with you to achieve this and ensure the continued success of your company.

If you have any queries about your existing insurance or any risk management strategies, get in touch with your insurance advisor today.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.