What can contribute to an increase in insurance costs for a business?

A lack of proper security measures can significantly contribute to an increase in insurance costs for a business because insurance companies assess risk based on the potential for losses or claims. If a business does not have adequate security in place—such as surveillance systems, alarms, or secure access protocols—it may be perceived as a higher risk for theft, vandalism, or other incidents that could lead to insurance claims. Consequently, the insurance provider may increase premiums to offset the increased risk associated with inadequate security.

On the other hand, high levels of employee training, the use of environmentally friendly products, and strict inventory controls generally contribute to risk mitigation, potentially leading to lower insurance premiums. These measures can reduce accidents, improve safety, and enhance operational efficiencies, all of which may positively influence insurance costs.