The spiralling levels of inflation and prices is leaving many businesses vulnerable. When some firms go into decline, their main recourse is insurance – provided they have sufficient cover.
According to U.K. based H&H Insurance Brokers businesses need to be aware about the risks of underinsuring their stock with the rise of living costs. In particular, rising costs could leave businesses exposed if they are not properly insured.
There are different forms of insurance that need to be considered. In addition to building structures and contents, there is ‘pure economic loss’, which is financial damage suffered as the result of the negligent act of another party which is not accompanied by any physical damage to a person or property.
The cost of living crisis is hitting all sectors of society with many companies looking to re-evaluate their financial commitments. In addition to higher energy bills, businesses are facing rising costs of a range of materials and supplies. This means they can be holding significantly higher values of goods on their premises putting them at risk of being underinsured.
The level of uncertainty has opened up space for insurtechs. Here there are signs that insurance is heading down the path of disruptive innovation. Many insurance firms that are utilizing technology are offering better deals, although some of these firms are relatively instable.
Examples include cloud based direct to consumer apps that offer micro duration policies for specific items; data APIs designed to pull risk information related to a given insurance prospect to speed up decision making; and end-to-end platforms spanning digital engagement, distribution and underwriting.
The concern is that the economic situation can lead to business owners considering reducing costs within their business, and potentially reducing the wrong costs which could put their business at risk. One such area that is sometimes dropped is insurance.
According to Paul Graham, managing director of H&H Insurance Brokers: “Costs rising at the rate they are is an issue for absolutely everyone. In terms of business owners it can mean that the levels of cover they have taken out previously will no longer be appropriate for them if anything goes wrong.”
Graham adds: “Another practical way we help people have the correct cover is that we offer credit, enabling clients to spread payments over ten months to help with cashflow when they are looking to meet rising costs in other areas.”
