The Insurance Blog

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Written by Super User

Category: Blog

Created: 20 June 2016

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BIBA Chairman Lord Hunt puts forward views on Europe

We are faced this week with a momentous decision, one that will potentially have repercussions for decades to come. I refer of course to the European Union referendum on the 23 June.

First and foremost, I urge you and your teams to vote. We cannot assume that our vote does not matter or will not affect the outcome it will - please do not leave this decision to others. Take a few moments out of your day and go to the polling station.

Secondly, I wanted to remind you of the BIBA position on the referendum. The opposing sides of the debate have filled our press and media with a plethora of claims and counter claims - some  at best mystifying and some, frankly, unsupported by the available evidence.

BIBA is on public record, in our 2016 Manifesto, stating unequivocally that the British insurance broking sector will be better off remaining in the EU.  We did not reach this position arbitrarily: it was the result of discussion and feedback from our advisory boards and technical committees, who were strongly of the opinion that a British exit from the EU would be disadvantageous to the insurance broker sector for the following reasons:

1. It would lead to uncertainty for businesses, which would have an adverse impact on the insurance market, investment and customer groups whose fortunes are closely linked with those of our members.

2. The existing system of insurance companies ‘passporting’ into the UK could cease, potentially leading to a serious reduction in choice for UK consumers.

3. It would seriously damage the ability of brokers to place business on behalf of clients domiciled within the EU.

4. Brokers need to be able to write suitable policies and have available the EU freedom of services provisions.

5. Europe provides access to a far larger pool of skills and knowledge than the UK alone ever can - which UK brokers believe is highly beneficial to retain.

From my own personal view point and, as BIBA chairman, I am firmly in the ‘remain camp’.  Quite apart from the wider, powerful arguments about peace and prosperity in Europe and the need for British engagement and leadership at a dangerous time for the world, I believe that remaining in the EU is a vote for business stability over uncertainty.  A ‘remain’ vote would stimulate investment and boost confidence that we will be able to continue to trade freely under the EU freedom of services provision.

That would, in turn, benefit both us within the sector and also our customers.

Please take the time to read past the headlines and consider the benefits of remaining in a Union that we can shape to work for us.

Yours faithfully,

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Written by Super User

Category: Blog

Created: 10 June 2016

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Elite Insurance withdraws from solicitors’ PI market

The company, which entered the market in 2012, confirmed that all existing policies will continue until expiry but that renewal terms will not be offered.

In particular the insurer listed reducing premium rates, increased propensity to fraud on solicitors' client accounts and the proposed increase in the small claims market affecting personal injury firms as being factors behind its decision.

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Written by Super User

Category: Blog

Created: 16 June 2016

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Unwittingly, too many businesses are risking their survival and making it very difficult to bounce back successfully from a major loss.

The problem is underinsurance, and insurers, brokers and their clients need to work together to ensure that when a loss occurs the insurance in place will respond effectively and get the business back on its feet quickly.

In today’s tough economic climate, many businesses are not prioritising the valuation and risk assessment aspect of their insurance programme, fearful that it may lead to higher premiums.

Across many different market sectors and varying lines of business, underinsurance is rife and when a claim arises the impact can be disastrous.

If sums insured are only 75% of what they should be, then insurers can apply that percentage to any claim. This ‘application of average’ can see underinsured businesses face a shortfall in their insurance payout and leave them with an unexpected and often sizeable bill.

Indeed, the issue has become such a concern for the British Insurance Brokers’ Association (BIBA) that it is publishing a booklet focusing solely on underinsurance later this year.

“We are in the process of writing an underinsurance guide and one version will be industry facing and the other will be for the SME market,” explained Graeme Trudgill, Head of Corporate Affairs at BIBA. [https://www.biba.org.uk/]

He added: “I think it is difficult during hard economic times to get the client to buy the fullest and widest insurance portfolio. If people have not had a claim before then it can be difficult for them to see just how much of an impact underinsurance can have on their business. There is always a big push to go on price, but it is a false economy.”

The widespread nature of underinsurance in the property market was underlined by research carried out recently by the Building Cost Information Service, which is part of the Royal Institution of Chartered Surveyors. It found that 80% of commercial properties are underinsured.

In similar work, the Chartered Institute of Loss Adjusters found that 40% of business interruption policies are underinsured with the average shortfall being 45%.

Changing values

The problem for many businesses is that getting the right sums insured is often complex and the values in question can change quickly.

When it comes to business interruption, for example, the definition of gross profit is not consistent between insurers and accountants and this can immediately lead to problems. Accountants will generally strip out things like staff and utility costs whereas insurers will not. Businesses also tend to underestimate how long it will take to get back on their feet and the standard business interruption indemnity period of 12 months is simply not enough.

In the property market, there is often confusion between the market value of a property and its rebuild cost. Charges for building materials and labour also change regularly and many businesses forget to include the fees for removing debris and clearing the site before a rebuild even starts. Where a business does not get on top of these issues, then its sums insured are unlikely to be accurate.

Underinsurance is also prevalent in the plant and machinery market. The lead times for bespoke machinery are often longer than expected and when plant is coming from overseas, the impact of currency fluctuation also has to be factored into the equation.

There are then the logistics around transportation and installation to manage and the cost and timescales for both can be highly variable, often rendering sums insured and indemnity periods inappropriate.

Carrying out valuations regularly will not always result in premiums going up and it is not unusual to find that the sums insured are too high and actually need to come down.

Even if the sums insured go up or indemnity periods are increased, the impact on the premium is often less than imagined.

For example, increasing an indemnity period from 12 to 24 months does not simply double the premium and such widely held misconceptions are damaging to the market and the underlying security of the client.

Once a loss has occurred, it is too late to avoid the negative impact of underinsurance and this is why it is so important to get the right sums insured at renewal.

[Courtesty of Zurich Insider]

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Written by Super User

Category: Blog

Created: 03 June 2016

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Birmingham Office Opens!

I have great pleasure in announcing that with effect from 3^rd June 2016 Insure Direct With Us have merged into Riverdale Insurance.

Insure Direct With Us have been established in Birmingham for 14 years under the leadership of Abid Khan and Mubarik Ali. During that time they have built a reputation for professionalism, great client service and in addition supported their own clients by developing network platforms in partnership with other local businesses.

Riverdale, a specialist charity and professional indemnity broker already has an established footprint in Manchester and now with the merger of Insure Direct With Us can replicate its enhanced client offering to Birmingham and the surrounding regions.

Birmingham clients will now be able to enjoy in-house delegated authority schemes, unique property owner insurance facilities and great business insurance products carried by A rated insurers.

We hope you will attend our launch event for Birmingham which will be in July and we will confirm this at a later date both on our blog and social media very shortly!