As companies across the UK are rapidly adapting to an ever-changing operating environment, we will use this page to give regular updates on what we see as the important issues for those with responsibility for risk and insurance management.
Sunday 24th May:
10.00am – Bruce Hepburn discusses the Mactavish Broker Conflicts Report with Jazz FM’s Johnny Hart.
Bruce also explains why he’s calling for the FCA to look into the role insurance brokers have played in the Covid-19 crisis: “They’ve got to look at whether the brokers failed to provide the right advice or whether they failed to execute the instructions of their customers, they have to look at the whole picture”
Sunday 24th May:
8.00am – The Sunday Times reports Mactavish’s letter to the FCA:
“Watchdog urged to bite brokers over Covid payouts The City watchdog is being urged to investigate brokers over Covid-19 insurance.
Claims resolution firm Mactavish has written to Chris Woolard, interim chief of the Financial Conduct Authority (FCA), calling for brokers to be held accountable for failing to protect potentially thousands of businesses.
Bruce Hepburn of Mactavish said a “sizeable minority of policyholders” would have had valid business interruption cover for the coronavirus “were it not for negligence on the part of their brokers”.”
Thursday 21st May:
10.00am – In this recent interview with Sky New’s Ian King, Mactavish’s CEO explains why he believes the insurance industry has demonstrated a lack of ’emotional intelligence’ during the pandemic. Blanket denials of cover under existing policies were followed up with the removal of broad swathes of cover for infectious disease risks during March renewals. Looking forward, Bruce expects to see a big increase in claims disputes in the months ahead.
Thursday 21st May:
8.00am – The Daily Telegraph covers Mactavish’s Broker Conflict Report:
“Bruce Hepburn, chief executive of Mactavish, called for the role played by brokers in negotiating between insurers and their customers to be reviewed and for transparency to be improved.
“Policyholders appoint insurance brokers to represent their interests but few understand that in a hard market their broker earns more money as premiums rise, presenting an obvious conflict of interest,” he said.
“Brokers also receive substantial premium linked revenue from services provided to insurers creating a second potential incentive to put the interests of insurers above those of clients.”
Wednesday 20th May:
5.00pm – Mactavish launches its Broker Conflicts Report.
- Brokers receive as much as 80% of their remuneration from insurers and just 20% from clients, creating the potential for a huge conflict of interest
- Much of broker remuneration is directly linked to premiums so brokers stand to benefit from the Coronavirus-fueled rise in insurance rates
- These conflicts risk leaving brokers acting as distributors for favoured insurers – often using inappropriate, over-standardised policy terms which have again been exposed by failed Coronavirus related business interruption insurance claims
- Policyholders are advised to run their own competitive tenders amongst brokers as a way of achieving better cover and lower premiums
Download the report to find out more about how much your broker could be making from your insurance placement and to get practical advice on how you can take control of risk transfer.
Monday 11 May:
9.00am – In this weekend’s Sunday Times Mactavish comments on the role brokers have played in the current crisis:
“Brokers are not doing their job,” said Bruce Hepburn, chief executive of Mactavish, an insurance claims manager. “These policies are full of weapons the insurers can use to deny claims, and the brokers have allowed that.”
Tuesday 5 May:
10.00am – In an interview with InsureTV at the beginning of the year, Mactavish’s CEO Bruce Hepburn explains that insurers and brokers have sidelined technical skills. As a result they are less able to understand and find solutions that truly match client needs.
Thursday 23 April:
10.00am – Mactavish states in a Daily Mail article that insurers are removing cover from policyholders with little or no notice – as research shows nearly half of UK businesses are facing closure:
“With premiums also rising, remuneration for brokers is increasing at this very difficult time. We have customers getting less cover and paying more for this, whilst insurers and brokers are seeing their financial rewards increase. It doesn’t feel like insurers and brokers are sharing the pain of businesses across the UK.”
Sunday 19 April:
5.00pm – City AM: Insurers have been accused of not “sharing the pain” of UK businesses during the coronavirus pandemic:
“Mactavish estimated that around one-in-five VAT and PAYE registered businesses in the UK – over 500,000 in total – will have renewed their insurance at the end of March and the beginning of April, but said many will have seen cover removed from their policies and increased premiums.”
Wednesday 2 April:
1.00pm – Following the PRA’s recent action over bank dividends and bonuses, insurers are now finding themselves in the spotlight. Today’s article in the Times gives more context:
“Britain’s biggest insurers are set to make multimillion-pound In the letter, Mr Woods said that the PRA expected boards “to pay close attention to the need to protect policyholders and maintain safety and soundness” when they were “considering any distributions to shareholders or making decisions on variable remuneration”.
Monday 30 March:
4.00pm – Mactavish’s CEO Bruce Hepburn writes for Insurance Age on why the industry should take the current disruption as an opportunity to reform itself:
“When we explain to a worried policyholder that the extension they bought specifically for circumstances such as these explicitly excludes ‘new diseases’, we lose the trust of that client for life. After all, aren’t we supposed to be the experts on the one-in-one-hundred-year event?”
Friday 27 March:
8.00am – In this latest update we share some our thoughts on the complex question of when you should notify your insurer of potential pandemic related claims:
“The decision as to what you should notify and when isn’t an easy one when the situation around you is changing day-by-day. On one hand, an early notification may prompt your insurer to offer guidance on how to manage the situation in line with your policy’s requirements – and to take a more favourable view of any resulting claims, on the other, a notification made now could lead to later losses arising from the event being excluded from future cover at renewal.”
Thursday 26 March:
9.00am – As we move to the next phase of responses to the pandemic, our team will continue to publish advice and tips on how to handle the challenges that we see in our day to day work. In this post we focus on the impact of claims made against companies by their employees and shareholders.
Tuesday 24 March:
8.00am – Mactavish contributes to Anthony Hilton article on the failure of both corporates and the insurance industry to understand and manage pandemic related risks:
“We have the biggest single random event which is clearly insurable, but boards have focused on cost-cutting and removing “redundancy”, while the insurance industry is sitting on the sidelines, thinking it is not its problem.”
Sunday 22 March:
8.00am – The Sunday Telegraph quotes Mactavish’s CEO Bruce Hepburn in an insightful article on the impact of Coronavirus on insurer’s reserves:
“The coronavirus crisis will be the final straw that plunges commercial policyholders into crisis with soaring insurance prices, massive reductions in cover and a hard line on large claims as insurers seek to rebuild their balance sheets, just as they did after 9/11,”
Friday 20 March:
12.00pm – We see another exclusion explicitly ruling out Covid 19 related losses.
A major insurer/reinsurer has removed an original communicable disease extension wholesale from a policy and added a new exclusion specifically ruling out Covid 19. The policyholder was not informed that the extension was being removed despite an imminent renewal.
All policyholders should take care to track changes between current and proposed wordings as they approach renewal – Mactavish expects to see much more of this.
Thursday 19 March:
10.00am – Update on likely extent of coronavirus related coverage.
Our technical team are reviewing policies from a range of insurers and brokers. As we do so we’ll continue to share advice on what to look for in your own policies. As ever, if you’re in doubt, the team will be happy to discuss this with you.
“Businesses face unprecedented interruptions of sites closing, suppliers & customers closing, supply chain disruption, staff unavailability. Most businesses buy business Interruption (BI cover, but almost none will be insured – why is this?
Commercial insurance is more complicated than most realise, and BI is no exception. BI cover is divided into various sections and is subject to many T&Cs, exclusions and extensions. Core ‘BI’ is triggered by physical site damage (such as after fire/storm). Other BI covers are specialist extensions:
a. Most relevant to Covid19 is ‘Contagious Disease’ BI cover – which covers interruptions arising from an outbreak of disease. But there are lots of possible problems:
i. Most businesses don’t buy this extension, and may not have even been aware of it as an option
ii. Where a standardised product is bought, disease sublimits are very low & will be a tiny fraction of the likely impact of Covid19 on the business
iii. Cover is subject to complex terms and conditions, especially problematic for a ‘new’ emerging disease:
- Cover may be restricted to certain named diseases
- It may be limited to “notifiable” outbreaks (i.e. those public health bodies already monitor)
- It may require there to be known cases within the immediate vicinity of a company’s site
- It often requires an official order to close down
- It might be challenged by insurers on the basis of being a ‘wide area’ event affecting a whole region rather than a localised issue that they intended to cover
iv. The Chancellor has now clarified that current government advice is sufficient to be deemed an order to close – but this addresses only one of the limitations above
v. The net position is still that most businesses will not have the cover, and even for those who do it may not provide anywhere near enough protection and may not trigger. The Association of British Insurers has now confirmed this.
b. There are other policy sections which might seem to respond (e.g. ‘Denial of Access’) – although this is typically restricted to where there is nearby damage (e.g. a neighbouring building or localised infrastructure damage) and a specific police order to close. This is unlikely to apply to current policyholder situations.
c. For event cancellation insurance, the picture is similar – in that policies vary in what events causing cancellation are included. So again the government clarification that their ‘advice’ is sufficient to trigger, whilst welcome, only helps in the minority of cases.”
9.30am – Expanding on our call for government support for insurers and policyholders, we explain how we think the pandemic will impact the insurance industry in both the long and short term. Key topics include:
- How much of the impact can be mitigated by insurance
- What are the likely outcomes for the insurance industry?
- Will Coronavirus drive a long term change in the way risk is understood and managed?
Wednesday 18 March:
12.00pm – Mactavish issues guidance on five practical steps policyholders can take to protect their businesses. Our experts share their advice on key questions:
- Covid 19 – what are you covered for?
- How do I stay compliant with my insurance when my business is changing overnight?
- Are there new risks I should be transferring?
- How will this impact on my renewal?
- How will this impact on my claims?
Tuesday 17 March:
2.00pm – Ahead of the Chancellor’s announcement of emergency financial measures, Mactavish call for government support for policyholders and insurers.
- Most Coronavirus linked losses will be uninsured, but investment profits for insurers have fallen dramatically – exacerbating hard market conditions
- Insurance premiums set to rise exponentially, some insurers will withdraw cover, and more exclusions will be included in policies
- Mactavish calls for creative approach including suspension of insurance premium tax, government lending to insurers, temporary freeze on insurance rates, automatic renewals
- This could lead to a major long-term shift in which risk is transferred back to companies, further limiting their activities as they attempt to manage their response to the ongoing economic disruption