Our friends at Smarta asked What insurance protection should organisations be considering in 2022? and this is what we told them.

When organisations launch, they tend to arrange the basic insurances required by law or regulation:

– Employers Liability (for any organisation that has employees or at least two Directors)

– Motor Insurance

– Professional Indemnity (required for some types of businesses, e.g. Insurance Brokers and Solicitors)

– Public Liability (required for certain businesses, e.g. Horse Riding schools).

They also often put in place insurances that meet contractual requirements, for example Public Liability (for other types of business), Professional Indemnity (for other types of business), Contract Works, Buildings insurance, etc.

As organisations become more established, however, attention turns to insurances that support the broader risk management aims of the organisation. That isn’t to say that such covers are luxuries: they play a vital role in facilitating achievement of organisational objectives and creating resilience.

Below, we outline some key covers that we think organisations should consider, based on Talbot Jones Ltd’s experience of handling claims and client enquiries throughout 2020 and 2021:

Business Interruption insurance

Business interruption insurance replaces lost income or profits after something goes wrong (traditionally following damage to premises) or covers the costs of alternative working arrangements. The impact of Covid-19 highlighted the cost of business interruption to many organisations. Business Interruption insurance has been a lifeline for many organisations this year who had cover that included pandemic-related impact, replacing lost income, allowing them to remain solvent and getting themselves into positions to carry on trading as restrictions lifted. This type of cover can form an integral part of your business continuity and disaster recovery plans.

Cyber Liability insurance

This is a poorly understood insurance product, both with policyholders and many brokers! It can provide financial cover for data loss, breaches, fraud and attacks. Ransomware attacks and Data Breaches are becoming more commonplace, and remain consistently in the news, with several local universities and other organisations targeted in the last 18 months. Organisations of all sizes are at risk of being targeted, and so this type of cover should form an integral part of your business continuity and disaster recovery plans, particularly for data-rich and service-based organisations.

Crime insurance

Crime insurance policies typically aim to cover losses resulting from fraud.

Pre-Covid, Employee Fraud and Phishing attempts accounted for more uninsured losses amongst our client base than any other cause, with losses typically averaging around £20,000. For many businesses, this is a significant amount of money to lose, and banks aren’t always able to recover funds- and if they can, it often isn’t the full amount.

The best way to manage external risks is through control methods such as security filters and employee awareness training, or mitigation methods such as dual authorisation of large funds transfers.

Employee fraud can be harder to control and mitigate, but this is a risk that should be on every organisation’s risk register, with appropriate control and mitigation in place. Insurance can also form an important third line of defence.

Trade Credit insurance

Trade credit insurers cover losses due to non-payment of invoices and this has proved to be a lifeline for many organisations through the Covid pandemic. Usually this works hand-in-hand with a credit referencing tool, allowing organisations to assess the risk of working with customers before deciding whether to supply them with goods or services. As such, this kind of insurance forms an integral part of a risk management strategy, as it provides tools that staff will use daily to make their decisions.

Buildings & Contents Insurance

Generally, the UK’s climate is temperate, but we do experience some major weather events. 2021 saw many organisations impacted by Storm Arwen. Many clients had buildings insured, either by their landlord, or via their policies, mostly driven by the requirements of a mortgage company or bank. Storm damage has affected not only buildings, but also the contents. Inflation has risen in the UK over the last year, and the costs of raw materials for construction/building repairs has skyrocketed, as has the cost of IT equipment due to the worldwide shortage of microchips and materials. The costs to re-equip a factory or office after a significant property damage claim can be high, and self-insurance, or use of reserves, might not be viable. Reviewing your building and contents insurance needs is therefore an important step in your risk management strategy.

Other considerations

Looking ahead, insurers are expecting to see some further Covid-related claims, e.g.:

– Employers Liability claims relating to catching Covid and occupational health concerns with home working

– Management Liability and Employment Practices Liability claims relating to how staff have been treated, engaged or managed through lockdowns, furlough, working from home, and returning to the office

With this in mind, it would be helpful to review existing covers in place. There are many other covers that can provide invaluable protection to businesses, but the above represent those that have been particularly relevant to the widest number of organisations over the last 2 years. By conducting an in-depth insurance review with an expert broker, you will be supported to integrate a rigorous, robust, and relevant risk finance strategy alongside risk control and risk mitigation measures that contribute to your overall risk management strategy.

Talbot Jones Ltd is a chartered insurance brokerage specialist in supporting Third Sector organisations and SMEs to better understand and manage their risks. Contact us for insurance advice, quotations or review.