Whatever the overall economic outcome after today’s surprising GE results, there is definitely a chance of some kind of serious Brexit happening, which Insurance Edge never believed would occur. This exit will not be easy to accomplish, as the EU will continue to delay and – rightly – play their stronger negotiating hand. The next three months will be a rocky ride for Johnson and his government, despite today’s euphoria, but while the details of the new Brexit deal are gradually debated in secret and resolved, there is still the chance of a default WTO rules position. Politics is like that; unpredictable.
Profound changes in regulations, tariffs and pushback regulations from Brussels could all make extra work – and expense – for insurers and brokers alike. The short answer is that business needs to be prepped for the worst, whilst encouraging a process of common sense negotiation, not bitterness and point-scoring following the Conservative GE win. Time will tell.
New research reveals that 22% of senior executives and managers at British firms believe that over the next 12 months there is a strong chance their organisations will make business interruption insurance claims linked to damages and losses worsened by a disorderly Brexit.
The findings are from Mactavish, the leading expert on commercial insurance placement and disputes, which is warning that many of these claims could be rejected. This is because the organisations may not have informed their insurers of these risks, which they are required to do by law. Some 18% of senior executives and managers who believe their organisations are at risk from Brexit say their employers have not done this. Only 25% of those who believe they are facing Brexit- related risks say their insurers have been informed of these. The remainder either do not know if this is the case or believe they do not face any specific threats from Brexit.
Furthermore, individual directors at these organisations could personally be exposed to legal action for not informing insurers of these risks because of traditional limitations applied to Directors and Officers (D&O) insurance cover.
Mactavish can help organisations understand the risks posed by a disorderly Brexit, review their insurance policies to see if they have adequate cover and help them with any related claims that are rejected.
Mactavish’s research reveals that 26% of UK executives and managers believe the organisations they work for will be affected by Brexit and have not prepared for it. In terms of the biggest potential risks facing organisations if Brexit goes badly, 35% of those interviewed believe their organisations could have problems with sourcing suppliers in the first year. This is followed by 31% who cite staff shortages, as they expect some of their EU employees to return home, and it will be more difficult to recruit from Europe. One in four (24%) think they could find it difficult to secure new sources of finance because their organisations are so focused on Europe.
Bruce Hepburn, CEO, Mactavish said: “Our findings show that many businesses are facing significant risks from a disorderly Brexit, and that many have not prepared for this properly or adequately informed their insurers of these. All of this creates several insurance related challenges and it can be difficult to know what they are covered for. Organisations need to review their existing cover to ensure it is adequate.”
Mactavish is the UK’s leading independent expert on insurance placement and disputes. It has been operating in the commercial insurance sector for over 15 years.