Many of us put insurance to the back of our minds once it has been taken out…which is exactly how it should work. Insurance should be invisible until you need it.

But what happens when disaster strikes, and your claim payout isn’t what you expected? In fact, it only covers a fraction of your actual costs.

This growing problem is affecting businesses across multiple sectors. When business owners experience an incident, they file their claim and expect the insurer to payout the full amount to cover their losses. Many are then shocked to only receive partial compensation.

 This issue is particularly rife in the world of property insurance, where companies are discovering, at the worst possible time, that they're significantly underinsured. This then leaves them responsible for covering the financial shortfall.

Construction and labour costs

One of the key issues contributing to underinsurance lies with the cost of labour and construction materials. As these prices have escalated in recent years, property values have increased in conjunction.

While property appreciation is normally considered a positive thing for property owners, it becomes a problem when your insurance policy doesn't reflect your building's current value.

For example, a property valued and insured in 2017 would likely be worth considerably more today. This means that, without regularly updating its rebuild cost, the payout for any current claim (including any reductions due to inadequate cover) would be calculated based on the outdated valuation provided to your insurer. This could potentially resulting in a considerable financial shortfall.

How big is the problem?

Research indicates a concerning 80% of commercial properties are underinsured, with these buildings typically covered for just 63% of their actual replacement value.

Overinsurance exists as well, though less frequently, with approximately 15% of buildings overinsured at an average of 122% of their value.*

Research shows these property types face the highest underinsurance risk:

• Sports and recreation facilities
• Hospices
• Pubs, hotels, and hospitality venues
• Nursing and care facilities
• Golf clubhouses
• Automotive showrooms
• Youth centres and nursery schools
• Funeral homes
• Retail warehousing
• Dental practices

As businesses become increasingly reliant on technology, supply chains are critical when it comes to keeping businesses running smoothly. However, as technology evolves, so do the risks of targeted cyberattacks. Businesses of all sizes are becoming increasingly concerned about the threat of cyberattacks and their potential to cause widespread disruption across supply chains.

Why supply chains are vulnerable

From communication to logistics tracking, supply chains rely heavily on technology. While this is great for increased efficiency and real-time updates, it also creates multiple ‘ins’ for cybercriminals. If one link in the chain is affected by a cyberattack, whether it’s a supplier, distributor, or transporter, the effects of this can quickly ripple outward, affecting other businesses within the chain.

Cybercriminals tend to target smaller companies within these chains, as they often have fewer cybersecurity measures in place. Once they have gained access to their systems, hackers can cause operational delays, steal sensitive data and even bring operations to a complete halt.

The real-world impact of cyberattacks

The effects of a cyberattack on a supplier or logistics firm can often be immediate and widespread. They can result in delayed deliveries, product shortages and communication breakdown between businesses. In sectors like manufacturing, retail, and healthcare, these disruptions can be particularly harmful, leading to financial losses, delays and reputational damage.

The cost of recovering from a cyberattack isn’t just limited to the business that was originally targeted either. Other businesses in the chain are likely to be affected by knock-on costs, whether it’s due to needing to source alternative vendors, managing delays or losing sales.

Building resilience in your supply chain

To protect your business from supply chain cyber risk, it’s important to understand who is in your chain and what cybersecurity practices they implement, including your suppliers, partners, and service providers; a chain is only as strong as its weakest link.

Some key steps you can take include:

• Carrying out regular security audits across your supply chain
• Ensuring third parties meet agreed cybersecurity standards
• Creating contingency plans to manage supply disruption
• Keeping communication channels open so issues are identified and managed quickly

How cyber insurance can help

It’s also important for businesses to consider cyber insurance as part of their risk management strategy. These policies have been designed to offer vital support in the event of an attack, helping to cover the costs of recovery, business interruption, and even reputational management.

Staying ahead of the threat

As cyber threats continue to evolve, businesses should ensure to remain aware of the resilience of their supply chain and consider what steps you can take to protect yourself if something does affect a link in your chain. Taking proactive steps to improve cybersecurity, both internally and across your network, can help your business stay ahead of the risks.

Sources

[1] Latest BCI report reveals escalating supply chain disruptions drive increased tier mapping and insurance uptake | BCI.org

[2] Using passwords to protect your data | NCSC.gov.uk

[3] Latest BCI report reveals escalating supply chain disruptions drive increased tier mapping and insurance uptake | BCI.org

Are you looking for the right level of insurance coverage but don't want to spend too much time and effort on it? An insurance broker may help you find a better deal, navigate complicated coverage options, and give you peace of mind with impartial advice. Here are 10 reasons why you should use an insurance broker for your insurance needs.

1. Impartial Advice: An independent broker provides access to a range of products and insurers and offers impartial advice. Unlike direct insurers, they are not tied to any one company and act as your agent.
2. Expertise: A broker can use their knowledge to highlight areas of cover you may not have considered, such as cyber, environmental, or trade credit insurance.
3. Plain English: Brokers are responsible for explaining insurance policies in plain language and making sure any optional extras or exclusions are clearly disclosed.
4. Risk Management: Brokers play a key role in risk management and can help you ensure your business is presented to insurers in the right way.
5. Selecting the Right Insurer: Your broker can advise you on the financial strength and quality of different insurers to help you make an informed decision.
6. Affordable Pricing: Brokers can often negotiate lower rates from insurers and offer flexible payment options, such as direct debit instalments.
7. Tailored Communication: A broker will be flexible on how you want to communicate, whether it's face-to-face, email, telephone, or video.
8. Access to Advice and Service: A broker will provide ongoing support and monitor your coverage limits and policy terms.
9. Claims Support: A broker can provide valuable advice and guidance on claims and act on your behalf to achieve a fair settlement.
10. Peace of Mind: Entrusting your insurance needs to a broker provides peace of mind knowing that an expert is working on your behalf to secure the best coverage and deal for you.

In the dynamic landscape of UK manufacturing, unforeseen events can disrupt operations, leading to significant financial losses. From natural disasters and equipment breakdowns to supply chain disruptions and market volatility, the risks faced by manufacturers are diverse and often beyond their control.

Business Interruption Insurance plays a vital role in safeguarding manufacturing companies by providing financial protection during periods of operational downtime. In this blog, we will explore the importance of Business Interruption Insurance for UK manufacturers and how it helps mitigate financial losses in times of unexpected disruptions.

Understanding Business Interruption Insurance

Business interruption insurance is designed to cover the financial consequences of a temporary halt in manufacturing operations due to an insured event. It provides compensation for the loss of income and additional expenses incurred during the interruption period, allowing manufacturers to maintain their financial stability and recover more swiftly.

Identifying the Risks Faced by UK Manufacturers

Manufacturers in the UK face a range of risks that can lead to business interruptions and financial losses. Some common risks include:

• Natural disasters: Events like floods, fires, storms, or earthquakes can cause extensive damage to manufacturing facilities, resulting in production downtime and revenue loss.
• Equipment breakdowns: Machinery breakdowns or failures can halt production, leading to delays and financial setbacks. Business interruption insurance can cover the resulting loss of income and expenses for repairs or replacements.
• Supply chain disruptions: Manufacturers heavily rely on supply chains to source raw materials, parts, and components. Any disruptions in the supply chain, such as transportation delays, material shortages, or supplier bankruptcies, can impact production and revenue. Business interruption insurance helps mitigate the financial impact.

Assessing Business Interruption Insurance Needs

To ensure adequate coverage, UK manufacturers should consider the following when assessing their business interruption insurance needs.

Firstly, they need to conduct an accurate financial evaluation to determine the potential financial losses that may result from a business interruption. This evaluation should assess the impact of downtime on revenue, ongoing expenses, and the time required for recovery.

Additionally, manufacturers should determine the appropriate coverage period based on the estimated time needed to resume normal operations. It is crucial to consider potential delays in repairs, equipment replacement, or supply chain recovery.

Finally, evaluating the need for additional expenses coverage, such as renting temporary facilities, expedited shipping, or outsourcing production, is essential during the interruption period.

Benefits of Business Interruption Insurance

• Revenue protection: Business interruption insurance provides financial support by compensating for the loss of income during a temporary shutdown. This ensures that ongoing expenses, such as payroll, rent, and utilities, can be covered, helping to maintain financial stability.
• Assistance with recovery: By alleviating financial burdens, business interruption insurance allows manufacturers to focus on getting their operations back on track. It helps cover the costs of repairs, replacements, and any additional expenses incurred during the recovery phase.
• Competitive edge: Having business interruption insurance in place gives manufacturers a competitive advantage, as it demonstrates their commitment to risk management and the ability to mitigate potential financial losses.

Business interruption insurance serves as a valuable tool for UK manufacturers to mitigate the financial impact of unexpected disruptions. By providing compensation for the loss of income and additional expenses, this insurance coverage helps manufacturers maintain financial stability and recover more efficiently.

To help you get this right, collaborating with experienced insurance professionals specializing in the manufacturing sector is crucial. We can assist in evaluating risks, determining appropriate coverage limits, and finding the right insurance providers who understand the unique needs of UK manufacturers.

When it comes to making an insurance claim, there are a variety of reasons why it might not be paid out in full, or at all. To help avoid any surprises, we've compiled a list of the top 10 reasons claims may be reduced or rejected.

1. Underinsurance

One of the most common issues is underinsurance. It's vital to have accurate, up-to-date valuations for your buildings and machinery. Our experience shows that around 81% of buildings are underinsured. 

2. Inexperienced or indecisive loss adjuster

Having an experienced loss adjuster who works solely in your best interest is crucial when dealing with significant losses.

3. Inadequate Business Interruption (BI) cover

While 36 months might seem excessive, it often provides the necessary time to restore your business to its pre-loss trading levels. Depending on your specific situation, 24 months may suffice, but 12 months is usually inadequate.

4. Non-disclosure

It’s essential to disclose all relevant information that could influence an underwriter's decision to provide cover. This includes previous County Court Judgements (CCJs), adverse directorships, criminal records, and any past insolvencies. Failing to disclose these can result in a claim being denied.

5. Lack of insurable interest

To make a valid claim, you must have a financial interest in the property you’re insuring. Without this, your claim could be rejected.

6. Misrepresentation of risk

Even minor misrepresentations can lead to claim denial under the Insurance Act. For instance, if your manufacturing process involves heat, and this isn't typical for your industry, it must be disclosed to your insurer. Anything that could increase the likelihood of a loss should be made clear.

7. Lack of supporting documentation

Claims can be denied if you don’t have the necessary documentation to back them up. This could include lacking an electrical safety certificate or failing to keep receipts for cash sales. Ensure you comply with all regulations and keep proper records.

8. Misunderstanding percentage uplift/declared value basis of cover

Insurance policies often include both a "declared value" and a "sum insured" for buildings. The declared value should accurately reflect the building’s value on the first day of the insurance period. The sum insured typically includes an allowance for inflation throughout the year (usually 15-25%). However, the sum insured will only protect you adequately if the declared value is correct.

9. Breaches of security warranties

Security warranties are specific conditions in your policy that must be adhered to. For example, your alarm system must meet the required standards. Make sure you understand your obligations under these warranties.

10. Exclusions for fires caused by cannabis farms

This is becoming an increasingly significant issue for landlords. Many policies now exclude cover for fires caused by cannabis farms, so it’s crucial to ensure your policy covers this risk. If you’re unsure, consult your insurance advisor.

By understanding these common pitfalls, you can take steps to ensure your insurance cover is robust, reducing the likelihood of issues when it comes to making a claim.

While it's impossible to achieve 100% protection from cyber attacks, businesses can take proactive steps to significantly reduce their risk of falling victim to cybercrime.

 

Data Backup

Businesses depend heavily on data, including customer details, quotes, supplier information, and contracts. Regularly backing up important data ensures it can be restored in the event of physical damage, fire, flood, or theft. It’s crucial that these backups are stored separately from the main systems, whether on an external hard drive, USB, or in the cloud.

Defending Against Malware 

Malware is malicious software designed to infect and damage devices. Installing and maintaining updated antivirus programs can help protect against these threats. It's equally important to educate staff on identifying potential risks, such as suspicious emails or untrusted downloads, to prevent malware infections.

Preventing Phishing Attacks 

Cyber Criminals often use phishing to steal sensitive information. Employees should be trained to spot suspicious emails, especially those from unknown senders, with unexpected attachments, or urgent requests for personal details. Always verify the sender's identity before interacting with any links or attachments, and implement multi-factor authentication to bolster security.

 

These measures can help create a more secure online environment for your business.

Ensure your business is fully protected, get in touch with our team to see if cyber insurance is worthwhile for you.

Searching for insurance for your business can be an overwhelming – not to mention stressful – experience. No matter what type of business you’re trying to insure, there are always multiple policies on the market, offered by insurers all claiming to provide the best deals.

So, what do you do? Not wanting to spend time searching around, many people purchase one of the first policies they’re offered, only to realise a few months down the line that they aren’t receiving value for money or worse, that they’re underinsured or not insured at all!.

One way to avoid this happening to you is to enlist the help of an insurance broker. A broker will act as your personal adviser for insurance matters, ensuring you receive comprehensive cover for a competitive price. Here are some reasons why you should consider an insurance broker for your business:

They are experts in their field
Whereas you might be unfamiliar with the insurance market, brokers are experts in their field with years of experience in finding clients the right deals for the right price. Not only will they match you with the most suitable policy, but they can also help you to understand the ins and outs of policy terms and conditions, so you know exactly what you’re covered for.

You’ll receive impartial advice
If you go direct to an insurer, they are bound to claim that their policy is the best for you, regardless of whether it genuinely provides suitable coverage for your individual requirements. Brokers, on the other hand, compare policies from numerous insurers, so you can be sure that any advice they give you will be unbiased.

You’re guaranteed quality coverage
Brokers have access to a wide range of insurers and only use reputable firms they know provide excellent service and quality insurance products.

They’ll likely save you time and money
If you use a broker, they’ll do all the hard work so you don’t have to! No more time wasted scanning comparison websites or filling out seemingly endless quote forms.

They take your individual requirements into account
Brokers know that no two clients are the same – everyone has different insurance needs and circumstances – so they take the time to assess your individual requirements and ensure they match you with a policy that provides adequate coverage of those requirements.

Brokers can be particularly useful if you have any unusual requirements which often aren’t covered in standard policies, often required in areas such as manufacturing and renewable energy.

They’re flexible
How many times have you emailed an insurance company and only received a reply weeks later? How many minutes have you wasted waiting on the phone just to speak to someone about your policy?

Brokers are far more accessible than insurance companies. They’re easy to contact and you can choose how to communicate with them. For example, you might want to arrange a face-to-face meeting to discuss your insurance needs, or you might prefer a chat on the phone. The choice is yours.

They’re in it for the long-term
It’s not uncommon for communication to dwindle the moment an insurance company has you signed-up. Brokers, on the other hand, are in it for the long-term and will provide you with support whenever you need it.

If you’re ever in a situation where you need to make a claim, it can be a daunting experience. What steps do you take first? What information do you need to provide? If you’ve used a broker, they’ll act as your advocate and guide you through the process to help get you in the position you were before the incident occurred.

Using an insurance broker will likely save you time and money, ensuring business is fully protected and for the right price. Want to know more? Get in touch on 01482 359500

 

 

 

 

 

 

Professional Indemnity insurance is vitally important for training providers who deliver training advice and services to clients or handle other people's data or intellectual property. If a client were to suffer a financial loss due to negligent training and/or advice, Professional Indemnity insurance would provide cover for this in the event of legal action or a claim. Our bespoke InTraining policy covers associates as standard… not all Professional Indemnity policies will automatically cover non-employees.

 

InTraining is available to training providers located in Great Britain, the Channel Islands, and the Isle of Man and can provide cover across a variety of industries. In addition to Professional Indemnity, Public and Products liability cover is automatically included and you have the option to select from a range of optional covers to meet the specific needs of your business. You are only charged for the cover you require, therefore you won't be paying for any cover that you don't need. 

 

If you would like to know more about what our InTraining policy can cover, give us a call on 01482 359 500.

Whilst many businesses are increasingly vigilant in amending their work policies to mitigate the risk of cyber-attacks, many still don’t have adequate protective measures against cybercrime in place. 

In the Cyber Security Breaches Survey 2019, recently published by the Department for Digital, Culture, Media and Sport (DCMS), findings suggest that larger business are still more likely to prioritise cybersecurity compared to smaller business and charities. Smaller businesses usually consider themselves to be less of a risk due to their scale, but there is little variation in the number of attacks between small and medium businesses, high-income charities and large businesses.

The rising cost of breaches 
Despite the number of targeted attacks with a financial impact decreasing slightly over the last year, the overall costs to those who are affected have risen drastically. Since 2017 when the average direct cost to businesses was £1,380, this figure has now grown to £3,150 in 2019. This amount doesn’t consider recovery costs and long-term costs which both add up to approximately £3,000 on average.

Understanding your costs 
The estimated costs of breaches in the past year varied widely across businesses, ranging between £300 and £100,000 across techniques including malware, ransomware, phishing emails and more. Concerns were raised during this survey that company management struggled to predict the full financial impact of a data breach and often failed to assess the bigger picture. 

For example, whilst ransomware might cost your business £5,000 to restore all your systems, you would also need to account for any company downtime, loss of business incurred from reputational damage and the cost of implementing new systems and structures to ensure the same thing doesn’t happen again.

Protecting your finances 
Although the number of large and medium businesses protecting their businesses with cyber insurance has risen in the past year, only 11% of all businesses and 6% of charities have specialised cover in place. What’s more, just over a third of businesses have a board member or trustee with specific responsibility for cybersecurity.

It’s important that, regardless of the size or nature of your business or charity, you are fully aware of both the immediate and long-term impact that cybercrime could pose to your operation.

At STP Risk Solutions, we’ve worked with many businesses from self-employed tradesmen to global corporations on their cyber solutions. To help ensure you’re protected, our specialist team can conduct a review of your existing insurance to evaluate whether cyber insurance would benefit your business. Just call us on 01482 359 500.