New Business Rated F&B: Best Contents Insurance – Cash.

Photo: Neuhausen/Franke and Bornberg

Michael Franke, CEO of the analysis company Franke and Bornberg.

The rating agency Franke und Bornberg has developed a rating for commercial content insurance and analyzed 67 rates and 234 rate variants from 41 commercial insurers. Conclusion: There are big differences in quality. All qualifying classes are filled, from excellent to insufficient.

Three out of four brokers purchase commercial property insurance. Many of them have only opened up this area of ​​business for themselves in recent years. The high complexity of the business and the insurance rates often prove to be an obstacle. Hannover-based rating and analysis house Franke und Bornberg has carried out the first rating for commercial content insurance after commercial liability and cyber insurance.

75 percent mediate commercial property insurance

Initial qualification for commercial contents insurance shows big differences in quality. All seven rating classes are filled, from excellent to poor. “The wide dispersion of ratings shows that there have been no uniform standards in commercial contents insurance to date. That is exactly what will change now. Experience has shown that many insurers take our ratings as an incentive, which in turn leads to an increase in the quality of new rate generations. This shifts the focus from price to what counts in insurance: profits in case of damage,” says Michael Franke, Managing Director of the Hannover-based rating and analysis house Franke und Bornberg.

Lots of room for improvement

In view of the fact that there has not yet been a rating, the level of performance is already satisfactory, says Franke. However, there is still air at the top. 67 rates and 234 rate variants from 41 market-relevant companies were evaluated. Of these, only seven fares have so far achieved the best FFF+ rating class.

The rating reflects much of the market. The still missing rates will be incorporated in the coming weeks. Not all companies offer various products with different quality characteristics.

These insurers have received the best rating (FFF+) for one or more rates:

  • Allianz Seguros Ltda.
  • Generali Germany AG
  • Inter General Insurance Ltd
  • Munich General Insurance Association AG
  • Württembergische Versicherung AG

The market principle

The Federal Statistical Office counts around 2.5 million SMEs for 2020. And the variety of sectors and business models is enormous. Small businesses such as kiosks have different requirements for contents insurance than supermarkets, hotels, or the manufacturing industry. To take these different requirements into account, Franke und Bornberg used the market principle when developing the rating.

“We take into account the insurance protection that companies need and that can be found in any market in Germany,” says Franke, explaining the approach.

“Our qualification focuses on essential basic requirements when necessary. The result is a uniform catalog of requirements across industries. In this way, we reduce complexity and make it easier for mediators to get an overview,” says Franke. He helped content insurance benefits not vary as much by industry as, say, liability.

Uniform evaluation criteria for all

The analysts first filtered 209 performance aspects in which the products differ from the terms and conditions available in the market. In a second step, these were condensed into the 62 most important evaluation criteria for the rating. Above all, those criteria that are important to most companies are used. This applies to fire, tap water, theft and storm perils, but also to extended cover and natural perils.

Services that are relevant to all companies also have a higher weight. Industry-specific services like frozen and refrigerated insurance for supermarkets, on the other hand, are not included. The uniform evaluation scale creates transparency about the basic quality and performance of the rates.

The starting point for the sublimits is an insurance sum of 100,000 euros. This base value allows you to compare the performance of different reference values. If, for example, overvoltage damage is insured at a rate of up to 25 percent of the insured sum, this corresponds to an appraisal of 25,000 euros.

qualifying classes

After going through the evaluation process, Franke und Bornberg determines an overall rating for each rate and assigns it to one of seven rating classes (FFF+/excellent to F-/poor). The classes are dimensioned in such a way that small differences in points that are irrelevant in practice do not lead to classification in a different class. School grades allow for further differentiation within grade classes.

In addition, minimum standards apply. For the higher grade FFF+, a product must be insured against overvoltage damage for a minimum of 25,000 euros and refrain from contesting gross negligence up to the sum insured or at least 100,000 euros. For the second best FFF rating, it is sufficient, in addition to the total number of points required, to protect yourself against damage caused by overvoltage with at least 25,000 euros.

rating and outlook

With the new qualification for content insurance, Franke and Bornberg provide another analysis tool in the commercial business. “The rating provides guidance regarding the quality of a product, but it cannot replace well-founded advice,” explains Franke.

Every commercial business has different risks and requirements for contents insurance. Therefore, intermediaries would always have to carefully determine the need and compare it with the relevant terms and conditions. Optimum insurance protection only arises from the interaction of rating, which shows basic quality and rate performance, and competent advice.

In the medium term, Franke expects a significant increase in quality: “Our rating will boost the performance and conceptual accuracy of commercial content insurance. As a result, the competition will move away from price towards more quality.”

Sustainability still plays a subordinate role in product design. But Franke is optimistic here: “The leading insurers are showing that there are interesting starting points for sustainable rates in the commercial business. I can well imagine that ESG aspects will also be included in our rating in the future.” Further developments should show how seriously insurers treat the issue of sustainability.

Business contents insurance, also known as inventory insurance, protects businesses and their owners against financial loss caused by damage to business property, inventory, and equipment. Unlike civil liability insurance, the basic scope of insurance coverage is not defined in advance, but can be determined individually by including or deselecting the insured risks.

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