Guest Blog: Physical Asset Management – Insurance Benefits

The more you have the less you know!

Accurate asset management can reduce insurance premiums and improve the speed of claims settlements

Companies often complain about rising insurance premiums but in reality, almost all buy a policy where the sum insured does not reflect the accurate replacement cost of movable property in their premises.

One factor behind the ‘wet finger in the air’ approach is the view that verifying the volume and value of the asset register, often highly dispersed from offices to factory floor to vehicles, locked cupboards, storerooms, and multiple branches, is the belief that the process is still labour intensive and time consuming.

Not only that, disposals, new purchases, moving premises, disappearance, theft, and loans all affect the inventory in opposing ways, making the aggregate equipment values difficult to track, especially with historic methods involving clipboards or laptop spreadsheets. Old items long since disposed of reduce sums insured, yet new purchases have the opposite effect. In  IT and AV the new equipment may well be much cheaper than those replaced, yet for furniture, tools and catering the opposite is probably true, again influencing the sums insured in opposite directions. Without recording all these changes the asset register quickly becomes out of date.

Refurbishment and relocations are yet another factor where it’s been easier to record the acquisition of multiple new items under one large sum from an invoice and recorded in the register with no breakdown.

Reorganisation results in staff and work station assets being relocated made worse by equipment stores operating unrecorded check in check out facilities.

Lack of proper descriptions, serial numbers, barcodes and locations can result in claims being refused or at least delayed until sufficient proof of ownership is produced, often at the cost of extensive file searches.

Finally staff retirement constitutes another threat with asset information often departing with the employee after years of service.

It’s clear from the above that most organisations operate in dynamic rather than static asset environments. Equally one might argue that insurance companies have it both ways,-over insure and it’s free premium for them, under insure and the claim can be averaged, ie reduced according to the proportion of sum insured against the actual values at risk.

Many enterprises are aware that the asset register is inaccurate. But just how many realise the potential business cost?

Business Value

An inaccurate asset register has a number of negative effects on company performance

  1. A waste of resources if over insured
  2. A potential large claim delayed or refused putting the organisation’s ability to trade in jeopardy, especially if evacuation is required and a loss of profits claim submitted.
  3. Internal auditors not undertaking required due diligence
  4. Inaccurate depreciation calculations, based on the assumed assets rather than those actually deployed
  5. Lack of asset maintenance recording, resulting in an inability to defend duty of care following an accident which injured staff or visitors, hence courts awarding increased compensation due to negligence.
  6. An inability to pursue warranty claims due to lack of serial numbers and machinery descriptions.
  7. Difficulties in linking portable appliances to their electrical safety test results.
  8. Reduced capacity for planning capital expenditure needs in future years.
  9. Inefficient deployment of staff for checking building facilities operations.

Despite admitting poor processes and a reliance on personal knowledge to determine asset locations, many administration managers’ knowledge of property information is completely inadequate, and a genuine shock occurs when a physical audit reveals just how badly the asset register has been maintained.

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Too little too late

Regrettably improving the accuracy of the asset register is a low priority. Finance departments see little impact on corporate value if so many items have already been fully depreciated. Inadequate management controls in this area often come to light only when a disaster occurs, eg fire, flood, or theft, and management is already fully occupied in sustaining business continuity, let alone trying to justify an insurance claim with a keen eyed loss adjuster.


The only way organisations can obtain a correct contents sum insured and speed up the claims process is to provide an accurate and  verifiable asset register. Barcode or RFID labelling and logging all assets during a physical audit on a mobile app is the first step. It’s much faster as so many items are identical. A detailed description should include the asset number, make and model, serial number, location, and replacement cost and then retained in an online asset management program available 24/7. Paper free systems integrating the app and web based database are readily available. With these records in place, it is a simple process to ensure any changes, such as disposals, location or user changes, and new purchases are updated within the system. The organisation therefore has an up to date and verifiable record of the asset register, supporting the timely settlement of any claim.

Given that many items remain in place over their lifetime, an annual audit of their existence is made very much faster by a simple scan of the barcode, instantly reported and time stamped back to the online records. Location changes can be selected from the app drop down list already created, with an audit trail maintained of who recorded the changes. Planned maintenance activity and building facilities can be recorded in the same way.

Modern asset management system charges are a tiny fraction of the asset value deployed even in an SME, and the ROI is significant. Evaluation is easy through a short live demonstration onsite or via webinar.

Established for 20 years ASSETTRAC Ltd can provide all the elements of an integrated asset management solution in all commercial sectors. Labels, onsite asset tagging, mobile apps and online software programs are all available under one roof.

ASSETTRAC Ltd, 01273 491267, or

Author: Stephen Laing, Managing Director @ Assettrac

Any views or opinions represented in this blog are personal, belong solely to the blog owner and do not represent those of Plus Accounting. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.

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