Mactavish urged companies with risk related to a disorderly Brexit to inform their insurance companies or possibly face next year's claims being denied
British insurance governance consultancy Mactavish has warned UK companies that their business interruption claims exacerbated by “disorderly Brexit” risk could be rejected.
The denial, it said, would be based on the fact they hadn’t informed their insurance providers of the increased risk despite it being a legal requirement.
In a survey conducted on behalf of Mactavish, 25% of senior executives and managers who believe they are facing Brexit-related risks said their insurers had been informed of these.
Of those who claimed their organisations were at risk from Brexit, 18% said their employers had not done this, with the remainder either unaware if they had, or believing they didn’t face any specific threats from it.
Mactavish CEO Bruce Hepburn said: “Our findings show that many businesses are facing significant risks from a disorderly Brexit, and that many have not prepared for this properly or adequately informed their insurers of these.
“All of this creates several insurance-related challenges and it can be difficult to know what they are covered for – organisations need to review their existing cover to ensure it is adequate.”
The study was conducted by Consumer Intelligence on behalf of Mactavish in October and involved interviews with 937 senior executives and managers.
Which Brexit-related risks could exacerbate a business interruption claim?
In its research, Mactavish found trouble sourcing suppliers was the most-cited Brexit risk that could exacerbate a business interruption claim, with 35% of respondents believing their company would suffer as a result of it.
This was followed closely by issues sourcing staff, which 31% cited as a concern, with 24% pointing toward trouble accessing new sources of finance outside Europe, and 23% worried about issues selling products and services in Europe.
An additional concern mentioned by Mactavish was that companies with directors’ and officers’ insurance – coverage that protects senior staff from legal costs incurred during their role – could be “exposed to legal action” by not informing insurers about their Brexit risk.
What does the insurance industry think of ‘disorderly Brexit’ risk?
The two major insurance industry associations, the Association of British Insurers (ABI) and the British Insurance Brokers’ Association (BIBA), have expressed a desire for an end to the Brexit uncertainty since the 2016 EU referendum result was given.
Speaking on Prime Minister Boris Johnson’s latest deal, agreed in October but rejected by Parliament, ABI director general Huw Evans said: “This agreement is a positive sign, but the key test is whether Parliament will vote for it.
“It is important that however we leave the EU, we do so in an orderly way that provides certainty for business, consumers and our world-leading insurance and long-term savings industry.
“Then we can move on to the important question of what a constructive future relationship with the EU looks like, that avoids the UK becoming a permanent rule-taker.”