Director, General Insurance Policy, Association of British Insurers
It’s never been more important to ensure risk management is a core part of a business plan. Whether it’s protection for property, workforce or customers, insurance has a vital role to play every step of the way.
Insurance response to COVID-19
Like all industries, it’s been a year like no other for the UK’s insurance and long-term savings sector. We’ve had a crucial role to play in supporting the economy and helping business customers.
It’s estimated that UK insurers will pay out £1.7bn in response to the COVID-19 crisis. We agreed a £10bn reinsurance arrangement with the Government to support the trade credit insurance market – a vital safety net to keep businesses trading – and created a series of lockdown commitments to provide clarity and certainty to businesses, including insurers being flexible about business premises being unoccupied and facilitating teams working from home while business equipment and employer liability cover remained in place. The industry has also come together to raise over £83m for the COVID-19 Support Fund, helping those most in need. And all while continuing with other day-to-day activity, such as supporting business customers who have been the victim of fire, flood or theft and helping get people back on the road if they have been involved in a road traffic accident.
The value of business insurance
Insurance is a critical component of business risk management. From the legal requirement of having employer’s liability insurance to professional indemnity insurance to protect businesses against mistakes, or commercial property insurance to protect your property and stock, having insurance for your business is a must. Every day, insurers pay claims totalling £22m to firms through business insurance policies, supporting millions of firms across the UK each year.
We’d be the first to recognise that the industry has been put firmly in the spotlight over business interruption insurance policies in the context of a pandemic and the stress this caused some businesses during lockdown.
Every day, insurers pay claims totalling £22m to firms through business insurance policies, supporting millions of firms across the UK each year.
The industry’s regulator, the Financial Conduct Authority and a number of insurers took a test case to the High Court in July to seek clarity on the wording of certain business interruption policies. This has led some to question the value of business insurance but it’s important to remember that its purpose centres on protecting business from the day to day risks.
If an employee has an accident, there’s a fire, flood or theft at your premises, or you lose out on trading because damage means you can’t use the property, insurers will be there to help. No insurance market in the world can provide extensive cover for the effects of pandemics, and it may require a significant investment from the Government if something is to be developed that provides such cover.
The ABI is engaged in constructive conversations across the industry, and more widely, to see how we can play our part in helping businesses recover from the challenges of the present day and of the future.
Managing online risks
It’s likely that a business of any size will rely on some form of online presence. If systems are damaged, fail or fall victim to a cyber breach, companies could be exposed to the risk of significant losses, the cost of repairs or the loss of trade while the problem is fixed.
Businesses are increasingly turning to insurance to protect themselves against the threat of cyber risk, and if the pandemic has taught us anything it is the need for companies to be prepared for events that mean businesses may be out of operation for an extended period of time. We’ve recently worked with the National Cyber Security Centre to publish guidance for firms thinking about taking out cyber insurance.
Your most important asset
Insurance can support companies in looking after the most important part of your business: your people. Looking after our health is paramount and private medical insurance can keep your team fit, well and ready for work. It can provide a speedier diagnosis, reduced waiting times, remote GP appointments and support your team’s mental health through employee assistance programmes.
Ultimately, whatever your line of business, insurance provides peace of mind. And good risk management by businesses will mean a greater range of insurance products are available. It is essential that everyone thinks carefully about the wide range of risks that a company might face on a day-to-day basis and how insurance can play a part in helping and supporting businesses to manage those risks and be as successful as they can be.