INSURANCE
PICTURE : TOM BANKS
Don ’ t be soft with your insurance
We caught up with Paul Davison ( pictured ), commercial director at Erimus Insurance Brokers , to discuss the current state of play in the insurance market …
Has the pandemic affected the insurance market ? Covid-19 has had a significant impact on the insurance market , both financially and reputationally . It is set to be the largest event to ever hit the insurance world , with reserves of £ 200bn globally . We also saw the Supreme Court hearing for the FCA business interruption test case – this was a significant ruling and found in favour of the policyholders . However , we must stress that it is still only a very small number of policies that have the specific wording required to make a valid business interruption claim .
Have there been any other changes to the insurance market ? The insurance market is cyclical , moving between “ soft ” and “ hard ” markets . For the past 15 years we have been in a soft market , which has meant lower premiums and plenty of capacity within the market . In 2018 the market began to harden , with certain classes of business , such as professional indemnity , being the first to fall to the tough market conditions . Covid-19 and the economic pressures that have come with it are the perfect storm for a hard market .
What does it mean for policyholders ? Businesses are likely to find increases across their insurance portfolio , some as high as 50 per cent or more . In addition to the higher premiums , there is also a reduction in capacity , meaning cover is not as readily available . This can leave businesses with significant uninsured risk exposures . Unfortunately , soft markets breed poor habits . When cover is abundant and premiums are low , there is less emphasis on technical competence . A hard market will test a broker ’ s expertise – it is vital for clients to have the right insurance broker on their side . With more than 35 years of experience in the insurance market and a collective total of more than 300 years of experience within our account executive team , we understand the demands of a hard market and how we can ensure our clients are protected and secure .
What can businesses do ? As insurance premiums rise it can be tempting to look for the cheapest price available . However , we would strongly advise against this unless the broker can demonstrate that the policy is fit for purpose and you are satisfied that you comply with your duty of fair presentation . When you buy an insurance policy it is more than a piece of paper , it is a promise to pay claims and protect your business . As with any contract , certain clauses and wordings can be the difference between a claim being paid , or not . Poor brokers sell on price alone , and this should be a red flag for clients . A good broker should be able to explain the significant policy cover and , more importantly , the significant exclusions terms and potentially onerous conditions .
You need to be confident that your insurance broker has arranged a robust insurance programme , and we would always advise engaging with a reputable insurance brokerage in your area . A good broker should be able to demonstrate their industry experience and capabilities and you should always carry out your own due diligence by reviewing the following : > Professional qualifications and industry experience of the individual
> Industry employment history – a regular change of employer being a red flag
> Personal experience in arranging insurance programmes in the same sector
> A quality information fact find , which your broker will need to obtain from you to make a fair presentation to the market on your behalf
> A professional broker will always provide you with written contract terms that detail the cover , terms and conditions upon which the insurer is prepared to enter into a contract with you .
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