Insurance is a 'luxury'
Many Assureds often make cutbacks as they seek to save money in difficult times and insurance is one area that comes under the microscope. However...
- Remember that Professional Indemnity policies are 'claims made'; once lapsed, no protection.
- Is it the right time to lapse a Directors and Officers Liability or Employment Law Protection policy at a time when Insurers are most likely to be called upon?
- Can a client afford not to insure an Unoccupied Premises?
- Can a Charity afford not to arrange adequate insurance protection? An uninsured claim is generally far more costly than a premium saving.
- To further illustrate, we explain below how these insurance classes have been affected:
Professional (Indemnity) Risks
We are seeing an increasing number of claims and incidents in particular areas:
Construction - the recession has hit this industry hard and we are seeing claims where original designs have been 'modified' or corners cut to meet ever tightening budgets. Similarly where multiple contractors and consultants have been involved with a contract there have been examples of a 'last man standing' approach to claims. This is when a number of the consultants or contractors (or their sub-contractors/sub-consultants) who were a party to a contract have subsequently ceased to trade and our Assured has been left 'holding the baby'. Particular serious situations include circumstances where our Assured has engaged the services of a specialist sub-contractor to undertake some specific work and the sub-contractor has subsequently ceased trading. We are also seeing an increasing number of counterclaims being made against Assureds following their pursuit of outstanding fees.
The usual rush of over-valuation claims have materialised for Surveyors and Estate Agents, as claimants look to recoup financial losses.
Due to a downturn in investment returns, we are seeing a number of allegations against Financial Advisers as to the suitability of the investment selected, and concerns in terms of the balance of their investment portfolio.
The recent spate of broker consolidations has (unfortunately) resulted in an increasing number of claims against Insurance Brokers as the new owners wrestle to integrate the (some quite large) new acquisition into their own.
We are also witnessing quite a turnover of 'micro' businesses as some businesses fold as a result of the recession and others start-up with new found self-employed status.
Management Risks
An increasing number of allegations arising from insolvencies and 'over-trading' have resulted in both Directors and Officers Liability claims and Employment Law claims.
This trend is unlikely to slow in the immediate future and we are currently defending a number of allegations made against Company directors.
Employment claims have 'rocketed' with our solicitor-manned Employment Helpline becoming more of a 'Hotline'. This is one of our fastest growing sectors of business in terms of both policy count and, unfortunately, claims. Employment Law Protection seems to be the new 'must have' in the current economic climate as firms 're-engineer' their businesses and redundancies ensue.
The introduction of the Disability Discrimination Act is already being felt with an increasing number of claims, and this impetus is likely to continue with new legislation being introduced in respect of equal pay and flexible working.
Specialty (Property)
Another class of business that is making a comeback is Unoccupied Premises. A 'growing' area in the teeth of a recession and, subject to £500,000 sum insured (£1million can be considered) and our policy conditions, we are happy to consider these risks.
Social Welfare
Largely unaffected by the recession other than the fact that their services are increasingly called upon and many are struggling to cope. This is particularly true of Charities whose services are in demand and yet funding is in short(er) supply.