As we are all only too aware, Covid-19 has changed every aspect of our day-to-day lives. The impact on businesses has been equally immense and sadly, is far from over.
While the leaders of companies across the country have been adapting, innovating and doing everything necessary to keep their firms afloat, there is one element that is all too often overlooked: insurance.
Of course, we buy insurance to protect ourselves from the kind of rare but catastrophic losses that would seriously impair our balance sheets or, in the worst circumstances, cause our businesses to fail. It is there to protect us when things go seriously wrong. In the current circumstances those balance sheets are already under considerable stress, meaning that insurance is more important than ever.
Unfortunately, the insurance market has become very challenging, with reduced capacity, increasing rates and a lack of appetite from many insurers to write certain risks. This means clients are having to seek alternative options, often at the very last minute – and brokers and underwriters are under immense pressure as demand for quotations is high. These pressures are leading to mistakes being made and many new restrictions to cover being introduced.
In addition, over the last few months Mactavish has discovered again-and-again that the actions our clients have taken in order to keep their businesses going have also invalidated or diminished their insurance cover. Luckily, in those instances, we have been able to step in and take corrective action before a catastrophic event has occurred.
Taking the pulse of your insurance programme:
Our clients are coming to us to see if their insurance programmes are fit for purpose, whether there are any key areas of concern and to check if the changes they have made to their business during the last few months – or changes to their cover – meant they were no longer compliant. We have therefore, created a service that is designed to meet these challenges.
Crucially, in these fast-moving times, we understood that our service had to be provided at pace to allow our clients to have a full understanding of any challenges they may face before they result in a major loss. We’ve now carried out dozens of Mactavish Health Checks for businesses of all sizes and across a broad range of sectors.
To date, we have not seen a single programme that did not contain significant flaws and, while some related to operational changes made in recent months, many issues were simply the result of poor programme design or incorrect documentation and advice. Some of the horror stories are truly astounding. Here are just a few of the many that I see on a daily basis:
- In one instance a well-respected broker had simply ‘forgotten’ to place a Directors’ and Officers’ policy leaving the company’s executives and board members without crucial cover
- A firm in the hospitality industry had a been sold a policy (via a broker) that specifically excluded its core activity
- One client had been advised by their broker that they did not have a valid Covid-19 claim only for us to find that that was certainly not the case
- A business had its Directors and officers Liability cover arranged in the wrong name to exclude cover for most of its operations
- A number of clients have seen major reductions to their insured limits, or even entire sections of cover removed from their policies, without any such changes being flagged to them (in some cases invalidating their active service contracts)
- An automotive manufacturing company had bought an Excess Liability policy via a broker that excluded Product Liability, leaving the client underinsured in the event of a loss stemming from the failure of its vehicles
- A firm had been told by its broker that its Management Liability policy did not cover one of its key markets, as a result, they had not made a crucial notification to their insurer. As the company was unable to renew its policy on the same terms, this would have left an outstanding uninsured liability
These may sound like rare errors, but I am afraid to say that they are in fact, the norm. If you are depending on your insurance to keep your business going should a major loss occur, then I cannot recommend enough that you review your programme today.
My company prides itself on being independent – we receive no income from any insurers or brokers – and on using our voice to champion the needs of policyholders. That is a choice we made many years ago because we wanted to avoid the conflicts of interest that blight the industry. In practice, it means that when we offer advice and guidance to our clients they can be absolutely certain that we are on their side.
If you would like to understand how effective your programme is, what you can expect from your next renewal, whether you have a valid Covid-19 related claim, and whether you have stayed compliant with your insurers’ terms and conditions, Mactavish is here to help.
Founder and CEO, Mactavish