A hackers tactics are diverse. Educating staff on common scams to watch out for is a great way to mitigate the exposure of being caught out. However, if you would like to manage the risk with insurance please reach out to Jason Cohen at Hamilton Leigh to discuss the benefits of Cyber Insurance for your business

The High Court has today handed down judgment in the COVID-19 Business Interruption insurance test case. The judgment brings highly-anticipated ruling of cover under certain non-damage business interruption insurance extensions.

Lee Cohen, Hamilton Leigh’s Managing Director said “today’s welcomed judgment is a significant step in resolving the uncertainty being faced by many businesses. Today’s judgment removes a large number of barriers for those able to make successful claims, as well as clarifying those that may not be successful”.

The test case was not intended to encompass all possible disputes, but to resolve some key contractual uncertainties and ‘causation’ issues to provide clarity for policyholders and insurers. 

It is of course likely that the judgment will be appealed.  Any appeal however does not preclude businesses seeking to submit claims with their insurer before the outcome of any appeal is known.

Hamilton Leigh’s team of experts are currently examining the judgment and expect to publish a summary document which we will make available within the next few days.

In the meantime, should you wish to discuss your policy wording with Hamilton Leigh and the likelihood of being able to make a claim, please contact:

Lee Cohen

E: leecohen@hamiltonleigh.com

T: 07980 606886

Or

Paul Staines

E: paulstaines@hamiltonleigh.com

T: 07866 637989

A wide range of industry-specific risks contribute to the transport, haulage and warehousing sector possessing a workplace fatality rate totalling twice the all-industry average. Nevertheless, you shouldn’t let employee injury, ill health and fatal accidents become an accepted aspect of your workplace. Have a look at the following industry-specific statistics to find ways that your transport, haulage or warehousing firm can combat top health and safety concerns. For more information, contact Hamilton Leigh today.

Here are the key reasons why this will be the hardest insurance market in a generation:

For the past 16 years, UK businesses have benefited from the longest period of ‘Soft Market’ conditions on record; this side of the market cycle is characterised by low rates, high limits, flexible contracts, and high availability of coverage.

Soft market characteristics

In soft market conditions, insurance companies often try to expand their market share. They enter growth mode, offering cheap rates, attractive policy terms, and, when allowed, discounted coverage. In the most extreme cases, the soft market resembles a bidding war, to offer the cheapest deals. Brokers should have proactively shopped around for their clients but as more businesses moved to new insurance companies offering lower rates, profits for the entire industry began to reduce. On top of that, when focusing on growth, market share and share price, insurers relaxed their previously stringent underwriting attitude, resulting in rising loss ratios. A correction to this unsustainable situation (reduced profits and rising loss ratios) was necessary, forcing the insurance market to harden.

What is a ‘Hard Market’?

In the insurance industry, a hard market is the upswing in a market cycle, when premiums increase and capacity for most types of insurance decreases. This can be caused by a number of factors, including falling investment returns for insurers due to low interest rates, increases in frequency or severity of losses, EU & regulatory intervention deemed to be against the interests of insurers and increased reinsurance costs.

Hard market characteristics

In a hard market, there’s less desire for growth and more of a restriction in the marketplace as insurance companies re-evaluate their books of business, their risk appetites, and how much capacity they want to present in the marketplace. In hard market conditions, underwriters often adhere to stricter standards in an attempt to correct any adverse loss ratios developed during soft market conditions. As a result, insurance rates often go up, the indemnity limits insurers are willing to provide decreases, and the number of players in the market reduce. This makes it harder for brokers to find coverage options, which means the insurers that are offering coverage can increase their rates.

Several factors have caused this rapid hard market? 

• launched in 2016, Solvency II which applies across the whole of the EU, placed a requirement on UK insurers’ to more than double their spare capital requirements. This has led to a number of insurers leave the market whilst others have significantly reduced their underwriting appetite and capacity

• The Ogden discount rate is a calculation used to determine how much money insurance companies should pay as compensation to people who have suffered life-changing injuries so that it will cover all their predicted future losses. When the Minister of Justice changed the Ogden table rate in December 2016, it meant that insurers had to pay out far more on larger personal injury claims. This figure shocked the insurance world, as reserves on catastrophic injury cases had the potential to double or worse.

• The insurance industry has endured persistent high loss ratios since 2013, primarily caused by an increase in frequency of severe property losses. Property rates in the UK were already far too low as we entered 2020 (affecting most commercial insurance policies).  Soft market rating had become completely uneconomic. Even if we ignore the terrible recent events, insurers needed property rates to increase considerably in 2020

• With property accounts already losing money, the last thing UK insurers needed were floods caused by storms Dennis and Ciara, estimated to cost well over £400 million. Climate change is causing insurers to struggle with correctly predicting floods, and they need to build up a pot of money to take care of the next set of bad floods which will inevitably be on their way

• Reinsurance is a key component of an insurers pricing model and rates will rise significantly leaving insurers with no option other than to reflect these increases in their rates and to reduce their market capacity

• When interest rates are high, insurers can get away with a certain amount of underwriting losses as they generate substantial investment income. Unfortunately, this is no longer the case, as the current interest rates are the lowest in the Bank of England near 300-year history. Insurers therefore have no option but to increase rates to balance their books

• Finally, it is estimated that the combination of Covid-19 insurance claims, reduction in business and investment losses will cost the worldwide industry in excess of £200 billion, making it the most expensive insurance event ever. Clearly the current FCA test cases will have a significant bearing on how much the UK insurance industry will have to pay out in Business Interruption losses relating to Covid-19 but this is unlikely to be determined for several months

Holistic View

This leaves us in the midst of rising insurance rates at a time when business risks are seemingly more prevalent than ever. Cyber breaches, climate change, pandemic, trade and professional risks are at the top of mind for most business owners.

Now is prime time for business leaders to take a thoughtful step back and reassess how they view and manage risk within their organisation. Insurers are in the business of risk but given the rapid hardening of premium and terms, businesses with a strong risk management perspective and a track record of low claim activity can avoid the sweeping increases of premiums and terms, likely to affect the majority of UK businesses. 

Taking a holistic view of risk can help identify ways to treat risk beyond just buying insurance. Analytical tools and a focus on total cost of risk can help businesses take a broader approach to managing and financing their overall business risks. Higher excess and/or deductibles are also ways to mitigate the continuing rate increases in the insurance market.

How Can Hamilton Leigh help you?

• Design and introduce a comprehensive and robust risk management programme
• Ensure your risk management strategy, systems & controls are communicated throughout the business to create a strategy of collective responsibility
• Communicate your risk management strategy with your insurers to demonstrate your proactivity
• Agree a risk retention strategy that accurately reflects the business’s risk tolerance appetite
• Investigate alternative risk retention options such as higher excesses and/or deductibles
• Reassess loss prevention practices
• Introduce you to your insurer to develop a strong, supporting business relationship

For further information, please contact Lee Cohen: M: 07980 606886 E: leecohen@hamiltonleigh.com

UK Businesses face threat of PDQ Machine theft or misuse. A growing number of businesses have suffered significant financial loss, which can only be covered by a Cyber Liability insurance policy. These fraudsters are not always behind a computer; they prey on businesses operating with less staff than normal, taking advantage of their vulnerability.

Businesses, large and small, operations across multiple industry sectors, operating with a ‘skeleton workforce’ following Covid-19, need to be aware of this threat.

How does it happen?

One person skilfully distracts members of staff, whilst his accomplice locates and manipulates the card machine by refunding substantial amounts of money onto their card(s). We have also seen examples of PDQ machines being stolen and used fraudulently as well as machines being switched.

Distraction techniques are not a new phenomenon. However, with more sophisticated payment technology available the use of card devices seems to be an increasing trend for fraudulent activity.

Some action points from us:

• Urge your staff to treat the terminal like the till – always ensure you are in control of the transaction and have sight of the device; consider them as mini “cash dispensers”
• Be wary if someone is taking longer than five to ten seconds to type in their PIN, or if someone is else is trying to get your attention during this time
• Businesses can install additional security measures on these devices to prevent refunds being given without specific authorisation, and should speak to their acquirer for further advice
• Protect yourself with a robust Cyber Insurance policy as standard business insurance polices do not provide cover for fraud

For more information on Cyber Liability Insurance, please contact Jason Cohen on 07511 398238.

We want to provide an update with regards to the FCA Business Interruption insurance test case and how this might affect our clients.

The coronavirus pandemic has shined a spotlight on the cover provided by non-damage Business Interruption insurance policies. The Financial Conduct Authority (FCA) announced its intention to seek clarity and certainty around this issue by holding a ‘test case’ action in the high court against what they consider to be a range of non-damage Business Interruption policy wordings that are representative of those used by the insurance industry. 

Hamilton Leigh is one of many insurance organisations to have voiced dissatisfaction with the way certain insurance companies conducted themselves in regard to Covid-19 Business Insurance claims. On 24^th April, we began lobbying government on behalf of our clients and proposed a Covid-19 Business Interruption Insurance Recovery Scheme to provide additional financial support to businesses in the UK.

The initiative has certainly gained traction and as a result of all the lobbying and complaints, the Government instructed the FCA to intervene. The FCA announced its intention to bring a test case in the High Court to challenge insurers’ decisions. The aim of this test case is for the court to determine the interpretation of certain policy provisions that include cover for Non-Damage (i.e. no physical damage to property) Business Interruption in relation to losses resulting from the COVID-19 pandemic. 

The FCA has decided to focus on 40 sample policy wordings from 8 insurance companies but this is a broad enough spectrum to include many other policy wordings. The regulator is only seeking to provide clarity for policyholders where the policy wording includes a Non-Damage Business Interruption clause, meaning that for the vast majority of businesses, the outcome of a claim under their policies will be unaffected by the test case. 

The High Court hearing is scheduled to commence 20^rd July 2020. All insurers will await the outcome of the High Court test case as this may affect their final claims decisions. We do not yet have confirmation as to when the final outcome will be announced. There is of course the possibility that any party may subsequently appeal the decision to a higher court. Unsurprisingly, the Government will also wait for the outcome of the test case before making any further decisions.

Nevertheless, following the outcome of the test case, we shall continue to lobby government as the outlook for businesses remains cautious for the rest of the year, given the ongoing uncertainty around the speed and sustainability of an immediate economic recovery.

We shall of course keep our clients fully updated with regards to the outcome. You can sign up for regular test case updates on the FCA website by clicking on the following link: www.fca.org.uk/firms/business-interruption-insurance

In the meantime, if we can be of any further assistance, please do not hesitate to contact your Hamilton Leigh client service executive. Alternatively, please click on the following link for regular updates on the FCA test case as well as a range of other subjects: https://hamiltonleigh.com/insights/

Throughout this whole period of uncertainty, employers have been required to react and make decisions quickly. Before returning to work, we would encourage businesses to take the time now to consider all options to create a safe working environment as this will be valuable in mitigating any difficulties and potential liability claims further down the line. Managing and overcoming understandable employee and customer concerns as to potential COVID-19 exposure once they are back at work, commuting or visiting places of business, will be far more challenging. To build such confidence, measures may be required which exceed the minimum required by official guidance.

Review the full update and government advice here.

As employers prepare return to work plans, workplace cleanliness is a topic on the minds of many. In the wake of the COVID-19 pandemic, cleaning practices play a crucial role when reopening workplaces. Employers can consider topics on this checklist when planning or updating cleaning routines.

Download the checklist here and get your business prepared.

The COVID-19 pandemic has changed many aspects of the current workplace, and hygiene and cleanliness are key topics when creating post-coronavirus workplace plans. According to health experts, there are several actions employers should consider. By taking workplace preparedness steps such as updating office layouts, encouraging new behaviours and evaluating existing policies, employers can help prevent the spread of COVID19 and protect the health and safety of their employees.

Download and implement the checklist we have prepared to help you get your business prepared.

In preparation for reopening your business and asking employees to come back to work, it’s imperative that your company thoughtfully constructs a return to work plan for its employees to keep everyone healthy and safe following the COVID19 pandemic.

A return to work plan is typically created to help reintegrate workers who have been injured or have been on leave. The plan includes details on how the worker will gradually return to work and any job related specifics. Its purpose is to formalise steps for a safe and quick return to work. Download the full guide to explore what your COVID-19 return to work plan should include.

Download the guide here