The global coronavirus pandemic led to the disruption of millions of businesses around the world. Artesian’s Andrew Yates offers some insights;
With businesses, especially SMEs, under pressure, the Financial Conduct Authority (FCA) brought a test case before the High Court in 2020, for a ruling on whether business interruption policies offered coverage against closures necessitated by Government-imposed lockdowns. As a result of this test case, in January 2021 the Supreme Court ruled insurers were liable in most cases, especially when a policy offered cover for closure as a result of an outbreak of infectious disease.
Since then, recent figures published by the FCA show that insurers have paid out almost £1bn in claims to businesses that were forced shut during nationwide lockdowns. £637m has been paid out in full settlements to policyholders with cover for business interruption, plus over £309m in interim payments to businesses to help them trade beyond the pandemic.
On the surface, it is hard to see the positives in this situation for commercial insurers and insurance brokers.
Financial impact aside, their reputation has certainly been damaged at a time when, during a hard market, business is tougher than ever.
However, I believe there is an opportunity here.
Demonstrating value in business interruption cover requires data and insight
The need for business interruption insurance has never been greater, and this provides an opportunity for savvy commercial insurers and brokers to prove their value.
The key to unlocking this opportunity is data and insight.
For insurers, it has never been more important to fully Know your Customer (KYC) – the entirety of their ecosystem and their full risk profile – if they are to avoid paying out millions in unexpected claims that they hadn’t accounted for. And let’s be honest, we live in a world full of uncertainty right now.
Whilst for insurance brokers, future success (attracting new customers and retaining old ones) requires them to be laser-point accurate in advising clients of their business interruption requirements, flagging potentially catastrophic financial threats, as well as always staying in tune with market changes and trends and being better placed to react to changing regulatory requirements from the FCA, BIBA and the ABI.
A one-size-fits-all approach simply won’t cut it in the ‘next normal.’
Data, Insight and Experience – Unlocking Business Interruption Know-How Artesian Connect™ combines leading advances in data science with a revolutionary way to harness the plethora of internal data, insight and experience that sits within an insurance business and supercharge it with external data enrichment.
Artesian call this the Know-How Equation™.
Artesian Connect™ combines everything an insurer or insurance broker knows about its customers, business and market, and leverages an advanced rules engine that ingests millions of structured and unstructured data points to layer on top of that know-how, quickly delivering the impactful data and actionable insights needed for accurate business interruption advice and policy underwriting:
· Access to accounting data enables insurers and brokers to monitor for trends that could impact business interruption cover, throughout the policy lifecycle. For example, if a client’s turnover has been increasing by 20% every year for the last 4 years, then the insurer may need to consider increasing the sum insured for the coming year by 20% as an estimate of the coming turnover.
· By providing advanced financial insights such as assets or Cost of Sales data, Artesian also makes variable costs easier to understand and calculate.
· With personalised advice so fundamental to future BI customer expectations, harnessing structured and unstructured insights provides new regular opportunities to engage and demonstrate value and differentiation based on a deeper understanding of the client landscape.
· For brokers specifically, surfacing advanced data-driven insights enables them to better navigate the impact of market conditions, anticipate needs, evaluate risk exposures and therefore present better submissions to underwriters.
For more information on how Artesian can help turn business interruption insurance into a business advantage (both for you and your clients) get in touch with a member of our team today.