Wherever possible, reduce the chance of loss through proper risk loss controls and safeguards. Where you cannot eliminate the risk, transfer it contractually. Most businesses already do this, for example, through their standard terms and conditions which contractually transfer certain exposures to clients, suppliers, contractors or other parties. Only after these steps are properly analysed and treated should the remaining risks be considered for insurance transfer.

The original purpose of insurance was always catastrophic loss, the kind of event that could destroy a business or ruin a family’s financial position. Over time that purpose has been diluted. Attritional losses, like cellphone insurance, minor motor damage, small household claims have been packaged and sold as “insurance”. Our view is that this is a distortion. These are risks insurance was never designed to carry. They are day to day costs that should as far as possible be managed, reduced or absorbed. Not transferred to an insurance policy.