Half of SMEs fail after insurable loss

Insurance experts said that Nearly 85% of SMEs think  They are fully insured but around half fail after an insurable loss to their business.

Suncorp chief of commercial insurance Anthony Day said while large corporations are generally covered for business interruption and major perils, small firms are less proactive.

“The lower take-up rate among small businesses is an issue. Around 60% of SMEs aren’t covered for business interruption to protect profits if they suffered a major loss,” Day said.

Daniel Fogarty of insurance firm Zurich said “Zurich is focused on SMEs and the brokers who serve them… Our Queensland sales are doing very well and SMEs are definitely interested in flood cover,”

 Fogarty stressed that the importance of getting the right advice for coverage, particularly in relation to flood cover because of the lack of data needed to price flood risk.

“If you’re starting out, working out what to insure against before you’ve even made a profit is hard,” a spokesperson says.

Small Business Victoria said an insurance broker is a professional insurance expert who will represent your interests, so this contrasts with an insurance company or insurance agent who may act in their own interests or those of the insurance company.

 “Choose a broker who understands the day-to-day risks of your business. If you do, you’ll get a policy that covers the risks particular to your business.”

Small Business Victoria outlines some key insurance policies for small businesses:

• Professional indemnity. If you supply advice, you can be sued for financial loss due to errors or emissions. Examples of professionals who require this cover include architects, designers, education workers, real estate agents and consultants.
• Personal accident, illness or disability. This refers to your inability to work and loss of income, and is particularly relevant to sole traders.
• Insurance over premises. If you own or lease a building for your business, this insurance will help you rebuild or replace contents in the event of a disaster such as theft, fire or storm damage.
• Workman’s compensation/employment insurance. If you plan to have employees working at your business, you are legally required to have this insurance. It protects employees and/or contractors from injury.
• Public liability insurance. This insurance protects your business if a customer is harmed by using your product or is injured on your premises.
• Business interruption. This provides cashflow based on expenses and expected net profit if business is interrupted by property damage or other uninsured perils.
• Electronic equipment or breakdown. Covers the cost of replacing computers and data re-entry after an insured event.

Willis unveils new program to eradicate indemnification uncertainties in D&O

Thursday, 26th May 2011

FINEX Global, part of insurance broker Willis Group, has unveiled a new program to eliminate the indemnification uncertainties in Directors & Officers insurance (D&O), called DARCSTAR ( Directors' All Risk Cover).

The program developed by Willis' financial, executive risk and professional liability business in association with a panel of insurers led by Allianz, QBE and XL.
Willis said the DARCSTAR cuts through the complexities of traditional D&O cover to advance all directors' costs in the event of an allocation dispute.

D&O cover is on a broad 'all risks' basis and the risk is covered unless excluded, which is different to conventional D&O policies that list several pages of insured perils.
The system also includes a guarantee feature from the insurers that they will not seek recovery from the policyholder for indemnifiable loss.

Francis Kean, the developer of the program, said by removing the complexities of indemnifiable and non-indemnifiable loss, DARCSTAR is the most significant shift in D&O coverage for many years.

Claims against surveyors' over-valuing

Surveyors are facing court actions by lenders over valuations they made before the housing market crashed in 2008. Countrywide alone is expecting to pay up to nearly £12m in claims.

The increase in cases has led to a near doubling of their insurance premiums.

It has been revealed that the UK’s largest estate agency chain, Countrywide, faced 35 writs in the High Court last year from mortgage lenders including Barclays and Bank of Scotland.

Gary Head, underwriting director at insurer Hiscox, said that: “There are potentially a lot more claims against these companies to come through the pipeline as more properties are repossessed and financial institutions realise their losses.”

In a statement, Countrywide stated: “Over the last couple of years, the recession and the fall in house prices has led to a rise in claims throughout the industry.”

In its accounts, Countrywide made a charge of £11.9m in 2010 against an “abnormal increase in the number of indemnity claims”.

It is reported that other surveyors such as Savills and Knight Frank are facing claims.

Growth for Europe Professional Indemnity Coverage – Finaccord

Finaccord, market research consultants, forecasts that the market for professional indemnity insurance across ten European countries - Belgium, France, Germany, Italy, Netherlands, Poland, Spain, Sweden, Switzerland and the UK – will be worth around €7 billion [$9.98 billion] by 2014.
Finaccord calculated that “gross written premiums for this form of insurance amounted to around €5.81 billion [$8.285 billion] across the ten countries in 2010, having grown from approximately €5.17 billion [$7.372 billion] in 2006. Moreover, gross written premiums grew between 2006 and 2010 in all countries, other than the UK, which accounted for around €1.59 billion [$2.267 billion] of the total for 2010.”

Finaccord Director Alan Leach said: “Across the ten countries, there are over 6 million enterprises potentially eligible for professional indemnity insurance. For some, holding professional indemnity cover is compulsory in order to exercise their profession while for others, it is optional. However, increasing take-up rates among those for which it is often not obligatory will be one of the drivers of the market in future, notably in the IT, management and financial consulting sector, which is the largest segment with 1.45 million insurable enterprises.”

Finaccord’s study also predicts how the market will develop across ten distinct professional categories, which it specified as follows: “accountancy and finance; architecture and engineering; broadcasting and publishing; complementary medicine; estate agency and property; IT, management and financial consulting; legal services; marketing; medicine, dentistry and other healthcare activities; and other professional sectors.”

Leach concluded: “The cost of medical negligence claims is rising more rapidly than the cost of claims for most other types of professional error across Europe, and this is the main reason for the high growth rate forecast for the sector of medicine, dentistry and other healthcare activities. This difference underlines how professional indemnity insurance in Europe is a complex set of markets rather than a single one, with issues specific to each country, such as insurance pools in the Netherlands or the growing number of solicitors unable to buy cover in the UK, or to professional categories, such as single project insurance in the architecture and engineering segment.”

Online Multiquote and buy software

PIA (Professional Insurance Agents) is offering various European countries its UK online mulitquote and buy insurance platforms for SME clients either direct or by a business to business arrangements (B2B). The software platforms can offer such policies as:

• (PII) Professional Indemnity Insurance
• (D/O) Directors and Officers Insurance
• (P/L) Public Liability Insurance with Professional Indemnity
• (C/C) Commercial Combined Insurance Policies.

The system is easily adapted into different languages and currencies,issuing fully translated policy documents and schedules for all the main SME type policies such as Professional Indemnity Insurance, Office and Directors & Officers Insurance.