Will the Business Interruption debacle spell the end of the insurer/broker relationship as we know it?
That's what I want to know and where I'm hoping you can help out.
I’m working on a really interesting article for Insurance Age and I am of course seeking contributions. The trade press has been dominated by the Business Interruption crisis and rightly so. Much has been written on that already and I don’t intend to go over old ground. What I’m focused on for this article is the immediate and long-term implications of this situation on broker/insurer relationships.
Brokers have been selling BI cover in the belief that it would pay out. If it is not paying out, it is either because brokers didn’t really understand what they were selling, or insurers are trying to avoid their obligations in the contract.
If the former, brokers need to be coming under greater scrutiny than they have been to date.
If the latter, then brokers need to be pushing insurers (perhaps even legally) to honour contracts that should be paying out.
Neither situation leaves brokers in an enviable position. They have either been selling BI policies they don’t understand or they have sold them in good faith and now have to pursue and confront the very organisations that pay them.
So what does this all mean? At a very basic level, trust in insurance could be fatally eroded. That is clear. But what does it mean for the current and long-term future of the broker/insurer relationship? What hope does a broker, who supports their client in legal action against and insurer, have of maintaining a healthy working relationship with that insurer?
How can brokers hope to convince their clients of the genuine benefits of BI cover when all public discussion points to it being useless?
And how much do brokers really understand the often lengthy, complex contracts they are selling to their clients?
I appreciate the majority of organisations in the industry will run screaming from the ‘opportunity’ to contribute to this article but I’m hoping that there will be a few brave souls who can help me get a clearer view of the implications of the BI fallout.
If you fancy having a chat about this, either on or off the record, email me at [email protected], comment below or send me a DM on LinkedIn.
Thanks
Martin
Freelance Communications Consultant working with a range of organisations to help them tell their story.
4 年Don’t know if you were on the Insurance Times webcast this morning Martin but a comment from one of the panel was particularly telling in my view. Apparently some insurance company claims handlers have been agreeing that certain COVID BI claims should be paid but more senior decision makers were telling them not to pay. I guess probably waiting for the FCA court ruling.
Freelance Communications Consultant working with a range of organisations to help them tell their story.
4 年How's the article coming along Martin?
serial investor , Insurance broking professional , management consultant
4 年Hi Martin. I believe most Insurance professionals would never have countenanced the dire situation some of their clients are now facing.Many businesses have some coronavirus cover under communicatable diseases clauses.most are a capped amount and have proximity conditions. If Brokers are honest the cover is there by accident.Some carriers are denying liability on the grounds that they were "not intending to cover a pandemic".Lawyers will get rich on that issue.I suspect contra preferentum will make it a difficult issue to defend. In my experience most brokers understand insurance contracts better than Insurers. Brokers have to understand the wordings intricately to get claims paid. As long as there is mutual dependency, the broker/insurer relationship will continue as before. There might be a long term credibility problem /brand damage for some carriers who are fighting the claims. stay safe
FCA Compliance, Insurance, Training and Claims Management,
4 年When hell freezes there will be an exclusion to cover it. There is a failure of the insuring mechanism rather than the relationship. If it is catastrophe cover that is needed, governments need to sell it and insurers need to buy it.
Editor, FinanceAsia, CorporateTreasurer
4 年Brokers need insurers and insurers need brokers. So unlikely imo.