Innocent Non-disclosure a Major Concern for Corporate Insurance Buyers
The possibility that claims will not be paid because of innocent non-disclosure of information when buying a policy is the top concern of British corporate insurance buyers, according to a survey by UK risk management association Airmic. The list of ‘stay awake at night’ topics is dominated by claims-related issues, though product innovation and global compliance also feature highly.
The survey, conducted late last month among 129 Airmic members, shows that 52.6% of participants cited ‘innocent non-disclosure of material information’ as being one of the five aspects of the market of most concern. A third mentioned the closely related issue of ‘warranties and basis of contract clauses’, 42.1% ‘delayed insurance claim payments’, 30.7% ‘difficulties in handling large claims’, 27.2% ‘inappropriate use of reservation of rights’ and 23.7% ‘increase in the cost of handling claims’.
Other concerns to feature prominently are ‘lack of insurance product innovation’ (46.5%) and ‘multi-national insurance program compliance’ (39.3%).
Airmic has been campaigning for changes to the disclosure requirements imposed on insurance buyers, and is using its annual conference to unveil a new model wording to negate basis clauses. It is well advanced in discussions with potential partners to create a compliance database for multi-national programmes, and is discussion with the market about new products.
Although supply chain risk is a prime concern for risk managers, only about half of those who responded have bought cover in this area. The main reasons cited for not doing so were cost, unreasonable data requirements from insurers and the difficulty of establishing the cost of business interruption when making a claim.
Cyber-risk was identified as a top five exposure concern by around three in four risk managers yet fewer than a quarter actually insure against it. The main reasons given were lack of adequate of coverage and high cost.
“It is noteworthy that three of the four main exposures that worry our members are areas where they find it hard to buy worthwhile insurance,” said Airmic chief executive officer (CEO), John Hurrell. “On the whole it is not the price that puts them off but the availability of what they believe to be adequate coverage. This would suggest that Insurers are missing an opportunity to do a lot of additional business with corporate UK.”