IT Week: How can improving your asset management processes and systems lower insurance costs?

Keith Dolby: It is not immediately obvious but the savings are real and significant. We were put onto the trend by a customer that came to us after being told by its insurer that they would get a reduction in their premiums if they carried out a proper IT asset audit. The scale of the savings was not mentioned initially but after we did a full audit their premiums came down 49 percent. If you think that this was a large organisation, 49 percent is a significant amount of money and the savings more than paid for the audit within a year.

On what type of insurance policies can these savings be made, and how can improving asset management processes deliver such a large saving?

It applies to a company’s general contents insurance and the savings come from two main areas. First, having proper asset management processes, regular audits and a central registry reduces the insurer’s risk that in the event of assets being lost or damaged it pays out to replace assets that never existed. And second, in most cases, carrying out an audit will mean the company can ask for insurance for fewer machines.

Are there any other insurance benefits companies can achieve from proper IT audits?

Having an accurate IT asset registry also reduces the risk of having problems when it comes to making a claim. We’ve worked with a company that had IT asset records so out of date that it had 386 and 486 PCs – which haven’t been made since 1990 – on its registry. If you are an insurer and a claim comes in following a fire, for example, and you see there are machines that old at the company, you are going to query how accurate their records are and how much you should be paying out. One company in the US became a customer after it had to make an insurance claim following Hurricane Katrina and found that the inaccuracy of its records slowed down the claim processing.

Given these benefits, why do many firms still have such an ad hoc approach to IT asset management?

The problem is that the costs associated with poor asset management are not direct costs that are immediately obvious. It is easy for IT managers to turn a blind eye to higher insurance premiums and forget that there is a benefit to keeping track of every piece of kit they dispose of. It is only when it becomes a board-level issue and executives realise they could save £100,000 on insurance premiums or superfluous licences that it becomes a priority.