Navigating the maze of Business Insurance
2016 was an eventful year in the insurance industry, including the introduction of The Insurance Act 2015 along with the news that 14,000 policyholders were affected after Gibraltar-based insurer, Enterprise Insurance, was declared insolvent*.
Both of these events will have an impact on commercial insurance buyers and should act as a reminder of the importance of making sound buying choices. At Eastwood and Partners we are well placed to help you make wise decisions about your insurance in 2017.
So what does all this mean for you?
The Insurance Act 2015 brings about the biggest change in insurance contract law for more than 100 years and affects every commercial insurance policy placed, renewed or amended after 12th August 2016.
The key changes for all commercial insurance policyholders are:
· The obligation to carry out a reasonable search for risk information.
· The requirement for clear and accessible presentation of this information.
The law has been updated to ensure that insurance contracts are fit for purpose. In essence, policyholders may see fairer outcomes in the event of a claim, but only if they demonstrate an adequate approach to disclosing information about their risk to insurers before the insurance is agreed – in the form of the new Duty of Fair Presentation.
Whilst generally a positive step forward, if you do not comply with your new duties, insurers will have a new range of ‘proportionate remedies’ which could include reducing your claim payments. The good news is that the industry has been getting ready for The Act for some time and we are equipped to help you comply with all the changes when arranging your insurance cover.
How can you make good, informed buying choices?
UK policyholders were left in an uncertain position in the summer when Enterprise Insurance went into liquidation with all claim payments immediately being put on hold. The impact of this on businesses and individuals is hard to measure in monetary terms but it is an undesirable position for all parties. It can be tempting to choose insurance based purely on price without too much thought to the provider, but when things go wrong this can prove to be a costly mistake.
Here are some steps you can take to minimise this risk and ensure that you are displaying good buying behaviours:
- Use an independent insurance broker who can call upon their knowledge and experience to recommend insurers with appropriate financial ratings as evidenced by rating agencies such as Standard & Poor’s.
- Work closely with that broker during the renewal process and indeed the lifetime of your policy, this way you can be confident they get to know and understand your business and the risks it faces. This will ensure that your insurance covers are arranged on an informed and correct basis.
- Make sure that you understand your policy and attaching warranties, limits and exclusions in order to ensure you are aware of the cover provided and your responsibilities.
- Communicate regularly with your broker, reporting general changes to risk, sums insured, incidents and possible claims at the earliest opportunity.
- Seek professional risk management advice.
- Employ robust health and safety procedures throughout your business and regularly train and update your staff.
Playing your part in this process should lead to improvements across the industry which will ultimately benefit you, the policyholder, with more balanced, efficient insurance solutions.
*Insurance Business Magazine.