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Business_Interruption_InsuranceYour commercial insurance policy will cover you for the replacement of buildings and contents if your business suffers a major disaster.

However, following an insured event such as a fire, flood, theft, vandalism or IT outage, business interruption insurance would cover the loss of income during the period of closure while you get up and running again.

A business interruption insurance policy will cover you for a range of costs:
  • Loss of rental income
  • Additional staff costs
  • Temporary relocation
  • Security for buildings
  • Loss of customer loyalty and subsequent reduction in sales
Owners often overlook business interruption insurance because they think they are covered by their buildings and contents insurance.

If you were unable to trade after a major incident and your customers had to look elsewhere while you got your business back on track, could you survive for what might be a period of up to 12 months? Even a few months would be enough to destroy some businesses and some previously loyal customers may never return when you open the doors again.

Business interruption insurance
As well as the cover outlined above, business interruption insurance can include damage to a neighbouring building that may affect the running of your business and result in a period of closure and loss of income.

It can also cover the loss of income if one of your suppliers suffers a major loss that affects the supply of products to your business.

Specific risks policies can also be written. One of the growing risks to business continuity these days is cybercrime.

If you have cyber risk insurance, you can include business interruption insurance along with your cyber insurance to support the business while the breach is identified and repaired.

Assessing your risks
Every business has different requirements and the level of risk and insurance cover required will vary. A manufacturing business with premises, machinery and stock will probably need longer to recover from a major incident than an office that could relocate within a few days. However, cyber risk may be greater for an office-based technology business.

This is where an insurance broker can offer their expert advice to find the most suitable cover for your business.

Call CLA (Risk Solutions) Ltd on 0121 321 4600 to discuss your business insurance.
Running an enterprise of any kind involves an element of risk.

Risk_Management_represented_by_car_console_dialTypical risks include:
  • Health and safety.
  • Environmental risks associated with business operations or external weather or economic conditions.
  • Financial risks.
  • Regulatory risks.
  • Security including buildings and cyber risk.
  • Fire, flood and other business interruption risks.
Your insurance policy can cover these risks.

The key is to identify the risks associated with your business, assess the likelihood of the risk occurring and estimate how much the incident will cost your business. Then decide if the risk can be limited and how much of the risk you need to cover for your business to survive an incident.

Risk management
Establishing a risk management plan and undertaking a review of the risks in all areas of your business will help you to identify and prioritise risks and put in place a process to mitigate them.

This will demonstrate that you have a system in place to minimise the impact of an insured loss and will provide your insurers with valuable information they can use when calculating your premium. It may also help to speed up your claim after an incident, for example: One of your employees is making a claim following an accident. You suspect that you were not negligent and the claim is fraudulent.

When investigating your claim, insurers will have to decide:
  • Whether the claim meets the policy terms and conditions.
  • Can a robust defence be provided by way of documentary evidence or systems?
  • Is it worth defending? Defence costs can sometimes outweigh damages awarded.
An effective risk management plan and proper procedures can often prevent an accident or fraudulent claim. This is always preferable and more cost effective than defending the claim.

Risk management support
Insurance brokers are in an ideal position to offer support and advice on best practice and claim statistics to help you to formulate a risk management plan, for example:

Key causes of accidents/claims (Insurance company data)
  • Slips and trips 27%.
  • Manual handling 20%.
  • Struck by/contact with object 17%.
By working with your insurance broker, you can discover how to mitigate some of your business risks to ensure you are minimising incidents and maintaining adequate insurance cover if you need to make a claim.

Call CLA (Risk Solutions) Ltd on 0121 321 4600 to discuss your risk management requirements.
Insuring commercial property can be complex.
Commercial buildings come in all shapes, sizes and material construction. They generally need specialised heating, lighting and ventilation systems and the flexibility to cater for a variety of businesses or tenants.

Commercial_Property_InsuranceInsurers will assess multiple factors when they are calculating premium costs. A commercial landlord or property owner will need to provide details such as:
  • Location and any risks such as flooding
  • Type of construction and materials
  • Fixtures and fittings
  • Security
  • Type of industry using the building
Underinsurance
One of the regular mistakes made when insuring commercial property is assessing the full rebuilding cost. When calculating the sum insured for building and contents, it can be easy to undervalue the full rebuilding and replacement costs. This will leave you with a shortfall if you need to claim for a total rebuild if the property is destroyed.

Often, commercial property insurers will work on a pro rata “condition of average clause”; for example, if you are claiming for a partial loss of 100k out of your insured value of buildings and contents of 200K and you are underinsured by 50% (the full rebuild value is 400K), you will only receive an amount minus the percentage you are underinsured (50% of 100K = 50K). This could have serious financial consequences when you come to make a claim.

Property owner’s liability
Commercial property owners will need property owner’s liability insurance to protect against claims from a third party due to an accident resulting in injury or damage to their property.
The amount of cover will be determined by the type of business and the risks involved.

Business interruption and loss of rent
Following the total loss of a commercial building through fire, flood or another event, it may take some time to rebuild or repair the property. During this time, you will be losing rental income and you may have to find alternative premises for your tenant.

The amount of insurance cover will depend on your type of property and how long rebuilding work is expected to take. Calculations will include time taken for clearance, planning permissions, rebuilding and replacement of fixtures and fittings. This will determine the indemnity period (12, 24 or 36 months).

Legal cover
This is usually offered as an add-on to your commercial property policy and covers your legal costs if you are involved in disputes for non-payment of rent, data protection or employment etc.

Insurance broker
An insurance broker will be able to help you assess your individual requirements and provide an accurate valuation to ensure your building is adequately covered.
Many business owners are not aware of business interruption (BI) insurance or understand the benefits it provides. It is therefore easily missed when insuring your business against risks. If you use an insurance broker, they will usually assess whether this additional cover is needed for your business and offer it as an addition to your buildings and contents policy. However, if you use one of the online comparison websites, it would be natural to think your buildings and contents insurance would cover most eventualities.

Business interruption insurance is not necessary for all businesses but is crucial for some; for example, if you have equipment and machinery that is difficult to replace or carry a lot of stock that will take time to re-manufacture, this type of insurance cover could mean the difference between business survival and failure.

How does business interruption insurance work?
Cover is available as an add on to your buildings and contents insurance. If an insured risk affects the running of your business, or causes extensive damage to the buildings, machinery, equipment or stock, resulting in your business having to shut down for a period, the insurance will cover the financial losses, for example:
  • Loss of revenue due to closure.
  • Increased costs of working such as temporary relocation or equipment hire.
  • Additional employee costs for overtime or hiring temporary employees.
  • Temporary storage costs and removal fees.
  • Safety and security at temporary accommodation.
  • Loss of income from rent.
  • Long term effect of loss of sales and customers.
If your business is not in a position to recover quickly from a major incident, then business interruption insurance fills the gap.

For example:
Business_Interuption_InsuranceA fire engulfs a large section of your premises and damages equipment and stock. Your buildings and contents insurance will cover the repairs and replacement of equipment and stock, but this may take months to complete.

Flooding or water damage repairs can take months to make the building habitable again and unless you can easily relocate and hire machinery and equipment, your business could fail during the time it takes to start trading again.

Each business must assess their own level of risk and whether a major incident would be manageable without the financial support that business interruption insurance provides.

This is where an insurance broker can help. Talk to CLA (Risk Solutions), your local insurance broker in Sutton Coldfield to get a quote for how much it would cost to add business interruption to your buildings and contents insurance. Call 0121 321 4600

 
 
UK citizens are being bombarded with nuisance calls by unscrupulous companies chasing no win no fee claims for injury from motoring accidents, holiday illnesses or injury at work.

Their arguments are sometimes so convincing that usually law-abiding citizens are tempted into making an insurance claim for an injury or illness that was less serious or never sustained. Let’s not fool ourselves; to make such a claim is fraud and the courts are starting to clamp down on this behaviour.

Insurance_fraudA recent case involved a couple who claimed to have sustained serious injuries when their Volkswagen Bora collided with a bus run by transport company Abellio.

Following subsequent CCTV footage of the crash, it was found that the bus was not travelling at more than 5mph and a medical expert argued that the crash could not have caused the injuries they were claiming for.

The bus company took the couple to the high court for lying about their injuries and the result was a fine of £6,000 court costs and prison sentences for the couple.

The government is also concerned about the increase in claims, particularly the soft tissue injury (whiplash) claims. Under the new laws introduced in 2017, measures have been implemented that will reduce the number of claims and limit financial compensation. This will help reduce the insurance premiums for all motorists.

Insurance fraud
Fraudulent claims for insured loss fall into many categories; these are some of the most common:

1.Motor insurance fraud
Deliberate harsh breaking to induce an accident, often carried out by organised criminals to obtain vehicle damage and personal injury compensation. Sometimes multiple non-existent passengers are claimed to have been injured.

2.Application fraud
Not providing all the facts about claims history or penalty points when filling in an insurance form to obtain a reduction in premium.

3.Commercial liability fraud
Every business in the UK must have Employee Liability Insurance unless they are a sole trader. Fraud can be committed by the insured company and third parties. Claiming for a fictitious injury or exaggerating an injury or loss are the most common.

Reducing insurance fraud
The insurance industry invests £200 million each year to identify fraud*.

Insurance fraud is a serious crime which can have a major impact on perpetrators such as difficulty obtaining future insurance, increased premiums, damage to employment prospects and possible criminal conviction.

Insurers are committed to combating insurance fraud to keep insurance premiums down for honest policyholders.

If you are not sure what to fill in on your insurance form or what you can legitimately claim for after an incident, talk to your insurance broker who will always be able to provide you with the right advice.

*source https://www.abi.org.uk/products-and-issues/topics-and-issues/fraud/
 
 
 
 
 
If you or your business is found to be in material breach of health and safety law, you will have to pay for the time it takes the Health & Safety Executive (HSE) to identify the breach and help you put things right. This includes investigating and taking enforcement action and is called ‘Fee For Intervention’ (FFI).

HSE_Intervention_FeeIf it transpires that you have not broken the law, then you won’t pay anything. Dutyholders who comply with the law, or where there is no material breach, will not be charged FFI for any work that HSE does with them.

FFI applies to dutyholders where the HSE is the enforcing authority. This will include:
employers
  • self-employed who put others at risk
  • public and limited companies
  • general, limited and limited liability partnerships
  • Crown and public bodies
What the law says
The Health and Safety and Nuclear (Fees) Regulations 2016, link to external website say that a fee is payable to HSE if:
  • a person is contravening or has contravened health and safety laws; and
  • an inspector is of the opinion that the person is or has done so, and notifies the person in writing of that opinion.
What is a material breach?
A material breach is something which an inspector considers serious enough that they need to formally write to the business requiring action to be taken to deal with the material breach. If the inspector gives you a notification of contravention (NoC) after their visit, you’ll have to pay a fee.
The NoC must include:
  • the law that the inspector considers has been broken
  • the reason(s) for their opinion
  • notification that a fee is payable to HSE
Where an inspector simply gives you advice, either verbal or written, you won’t have to pay anything for this advice.

How much it costs
It currently costs £129 an hour. The fee will include the costs covering the time of the entire original visit. The total amount recovered will be based on the amount of time it takes HSE to identify the breach and help you put things right (including associated office work), multiplied by the hourly rate.
Your fee may include the inspector’s time:
  • at your business or workplace
  • preparing reports
  • getting specialist advice
  • talking to you after the visit
  • talking to your workers
The fee can vary depending on:
  • how long the original visit was
  • the time the inspector spent helping you put things right
  • the time it took the inspector to investigate your case
  • any time we spend on taking action against you
Find out more
The Guidance on the application of Fee for Intervention (FFI) document (also available in Welsh) sets out the general principles and approach of the scheme. It includes examples of material breaches but does not cover every scenario where FFI might apply.

Inspectors will apply this guidance and their enforcement decisions will be based on the principles of HSE’s enforcement decision-making frameworks – the Enforcement Management Model (EMM) and the Enforcement Policy Statement (EPS).

The Guidance on the application of Fee for Intervention (FFI) document (also available in Welsh) sets out the general principles and approach of the scheme. It includes examples of material breaches but does not cover every scenario where FFI might apply.

Some Management Liability or Directors and Officers insurance products provide cover to protect against FFI.

If you would like to discuss your own Management Liability Insurance or D&O policy then please contact us on 0121 321 4600 or send an email to info@clarisksolutions.co.uk
If an employee is injured or becomes ill as a result of the work they do for you, they can claim compensation from you.

Meeting your health and safety duties is easier than you think. Providing you have taken reasonable steps to prevent accidents or harm to your employees (and the injury or illness was caused after 1 October 2013), you shouldn’t have to pay compensation. However, if a court finds you are liable, employers’ liability insurance will help you to pay any compensation for your employees’ injuries or illness.

Though there were fewer prosecutions taken in 2016/17, the statistics show an increase in fines to £69.9 million from the 2015/16 total of £38.8 million. New sentencing guidelines in England and Wales were introduced in 2016. Twenty large fines accounted for £30.7 million of the new figure.

Key figures for Great Britain (2016/17)
  • 1.3 million working people suffering from a work-related illness
  • 2,542 mesothelioma deaths due to past asbestos exposures (2015)
  • 137 workers killed at work
  • 609,000 injuries occurred at work according to the Labour Force Survey
  • 70,116 injuries to employees reported under RIDDOR
  • 31.2 million working days lost due to work-related illness and workplace injury
  • £14.9 billion estimated cost of injuries and ill health from current working conditions (2015/16)
Above taken from http://www.hse.gov.uk/statistics/ and http://press.hse.gov.uk/2017/britains-annual-injury-and-ill-health-statistics-released/

How insurance premiums are calculated
Your insurance premium is calculated by insurers by assessing the risks associated with the type of work being carried out. For example, if you employ mainly office based personnel, your premiums will be lower than for manual workers because the risks are generally lower.

Other factors include type of industry, previous claims history, number of employees and factors that may improve your risks such as management systems you have in place.

Generally, your employer’s liability insurance will cover you against compensation for injury, disease, damage or death together with any related financial losses incurred by the claimant. It will also reimburse the Department for Work and Pensions for any benefits paid out during the claim.

Liability_Insurance_for_health_and_safety_proceduresHow to reduce your employers’ liability insurance premium

Providing you can demonstrate that you have an effective Occupational Health and Safety management system in place, insurers can usually reduce your premiums. An effective management system will help to minimise the risk of injuries and diseases and the risk of a successful claim being made against your organisation.

You may need the support of an external consultant if you do not employ your own health and safety personnel.

CLA have partnered with Health and Safety Assist to provide access to your own safety management hub and expert advice via an online portal. This will help you to manage your entire health and safety processes, action plans and audit trails with documentation all in one place.

Join Health and Safety Assist to improve your health and safety management and reduce your insurance premiums.

For more information visit our web page http://www.clarisksolutions.co.uk/health-and-safety-assist or call one of our account managers.

 
Despite feeling the strain from the uncertainty caused by Brexit, the UK construction industry is continuing to grow. However, with the impact of Brexit, we could see a speed towards offsite construction and robotics. We look at how this is this going to affect the insurance requirements of companies in this sector.

With uncertainty arising as a result of Brexit and a shortage of skilled workers in the construction industry, firms have begun to innovate, turning towards technological advances such as offsite construction and the use of drones onsite. CLA are well aware that with ever-changing and developing technology in this sector, the associated risks will also evolve alongside these advances. As construction industry insurance specialists, we are well placed to advise our clients on the implications this new technology will have on their insurance requirements.

Setting aside these new evolving risks, the construction industry continues to operate within high-risk environments. The risks are myriad: working onsite, working at height, working in different environments each day, working under different supervision and direction and injury can be easy to come about. In 2016 3% of workers sustained a work-related injury which contributed to 2.2 million days off that year (Health and Safety Executive report).

Furthermore, those in the industry are often working on third-party sites and in premises where they are exposed to third-parties and their property. Employers’ liability insurance is a legal requirement and most businesses will be aware of this, but they might not fully understand their potential exposure from injuring a third party or damaging their property when working on a private dwelling house or a shop. This is particularly common for smaller businesses.

The other area of risk, highlighted in our previous article, is the fact that your insurance will not cover the cost of an HSE investigation or subsequent fine. www.clarisksolutions.co.uk/2017/12/05/hauliers-and-construction-companies-ignore-health-and-safety-risks-at-their-peril

It’s a niche and complex area. You need specialist underwriters and specialist risk managers that are up to date with the industry and understand the pace and speed of change.

Drone_over_building_siteRobotics
Machine rather than man will be constructing the buildings of tomorrow, with robots taking on the manual tasks, driverless bulldozers and diggers supporting them and drones flying overhead to monitor progress and carry out site inspections.

It may sound a bit sci-fi but these forms of technology are already being used on many building sites. For instance, in its Global Construction Survey 2016, 42% of respondents said they used drones to monitor construction status.

Whilst the commercial benefits of drones are clear, there are still concerns around mid-air collisions or loss of control, plus the potential for refusal of third party claims involving drones operated by, or on behalf of an insured business. *

Adoption of these technologies in the construction sector has a number of advantages. As well as helping to address the skills shortage by removing the risk of human error, it will also reduce the number of worksite accidents.

Source: KPMG, Global Construction Survey 2016, Building a technology advantage 1

* CLA can provide drone insurance as part of our Aviation and Aerospace product suite.

We can also provide the following support for the construction industry to help keep you fully covered during this period of growth:
  • One-call access to expert advice: Delivered by specialist construction risk control surveyors and our provider’s in-house inspection engineers team.
  • Flexibility: Our experts in London, Manchester or Birmingham can offer 24 separate covers under one module policy.
  • Specialist construction claims service: Expert engineering, property and casualty claims teams and expert construction loss adjusters will oversee construction claims.
  • Legal services: Offering more ways to manage costs through legal risk and compliance solutions, with a specific focus on HSE legislation.
Health_and_SafetyTwo recent cases of accidents in the workplace resulting in court cases being brought against companies and directors by the Health and Safety Executive highlights the increased risks to employees in these sectors.

The cases below are just two examples of the many court cases and fines imposed on companies in breach of health and safety regulations.

The first case involved an HGV driver who suffered fatal injuries while coupling the HGV tractor unit to a trailer.

**Speaking after the case, HSE inspector Jessica Churchyard said “This tragic incident led to the avoidable death of a young man, and was caused in part by the failure of his employer to implement and monitor safe systems of work to prevent vehicle runaways.
“This death could have easily been prevented if his employer had acted to identify and manage the risks involved, and followed the industry guidance.”


The second case resulted in the amputation of a demolition worker’s left arm and right hand.

**HSE inspector Rohan Lye said after the hearing: “If the company and its director had taken basic steps to decide how to do this routine task, and what control measures to use, they could have prevented this devastating incident resulting in an employee suffering life-changing injuries.”

In the first case involving the HGV driver, the company was fined £170,000 and ordered to pay costs of £6,268.80.

In the second case, the company was fined £150,000 and ordered to pay costs of £9,523.04. In addition, the company director was sentenced to ten months imprisonment, suspended for two years and ordered to complete 200 hours of unpaid work.

Insured risk
In both cases the companies would have had to pick up the fines. Your Employers’ Liability insurance policy will generally (depending on your policy wording) cover you for:
  • Employee compensation
  • Employee and criminal proceedings defence costs
  • Court attendance compensation
Even if you have Directors and Officers insurance as well, neither will cover the cost of an HSE investigation or resulting fines or time in prison.

How to minimise your risk of prosecution
As the two quotes above from HSE inspectors imply, both incidents could have been prevented if the employer had implemented effective risk management and approved codes of practice.

To protect your business, you will need to manage your safety documentation, training records and risk assessments etc. Every business has most of this in place but very few can easily and quickly put their hands on it and rely on it being up to date.

Our partnership with health and safety specialists “Health and Safety Assist” can help you with this.
Their online portal is a secure resource and provides access to your own safety management hub. The portal will help you simplify and efficiently manage all of the documents necessary to meet your health and safety responsibilities and comply with the relevant standards for your business sector.

There are also a host of added benefits that you can exploit as the portal becomes more bespoke to your business. It could lead to reduced insurance premiums by demonstrating you have proper management of your workplace risks and compliance with health and safety legislation.

To find out more about how working with Health and Safety Assist can save you money, protect you from prosecution and a hefty fine or prison sentence, please contact one of our team.

**Contains public sector information licensed under the Open Government Licence v3.0
Business insurance provides cover for specified risks. The insured receives compensation for a specified loss such as theft or damage, in return for the payment of a premium.

Your insurer will calculate your premium based on the risk of an insured event happening to your business.

If you can show that you have minimised the risks and put in place procedures to reduce the possibility of a claim, there is a good chance you can lower your insurance premiums.

Health and Safety Assist
Health_and_Safety_to_businessWith insurance premiums rising due to an increase in claims over the last 10 years, anything you can do to demonstrate that you have minimised some of the risks to your business may help you to save money on your premium.

In the same way, insurers can offer lower premiums to fleet owners who install CCTV cameras in their
vehicles, proper management of your workplace risks and compliance with health and safety legislation can provide the same benefits.

How does it work?
These days there is increased pressure on businesses to meet a variety of health and safety requirements and accreditations such as CHAS, Safe Contractor or ISO. Together with the growing claims culture in the UK, it is more important than ever to manage your health and safety risks.

Health and Safety Assist is an online portal giving you access to your own safety management hub and support from an experienced team when you need it.

The service includes:
  • Reminders of anything/everything that needs to be done saving you time and money.
  • Tasks and “to do” lists managed centrally and allocated individually.
  • Your questions always answered at a time to suit you.
  • The system will keep all information (conversations, activities, documents, tasks, events) in a structured format in one secure place that is always available.
  • All your documents and administration in one place with easy (multiple) access.
  • Extended Risk Management benefits across your business.
  • A boost to business insurers and a real positive for underwriters.
The portal provides:
  • Document storage.
  • Action plans.
  • Sector related documents.
  • Accident incident and claim management support.
  • Personal calendar.
  • Task management and discussions.
  • Live chat “Ask the Expert”.
  • Audit trail.
  • Secure access.

Protect your business from the claims culture
If you have had to deal with claims from employees, face a claim investigation or a reduced claim pay-out from your insurer, you will benefit from the Health and Safety Assis consultancy and portal.

Their experienced team of risk managers and health and safety consultants will help you set up management systems to minimise the risk of a claim and, if a claim is made, will be there to support you.

Other benefits
Some of your customers may require you to gain health and safety accreditations before they consider you as a supplier. Typically, blue-chip corporates and government departments will expect you to have accreditations and a risk management policy in place.

Health and Safety Assist can support you with:

  • Risk management.
  • Insurance Risk Underwriting and Surveys.
  • Insurance Claims and Accidents.
  • Incident Investigation and Reporting.
  • Protection against the Insurance Claims Culture.
  • Site Risk Profiling and Reporting.
  • Contract and Tender Submissions.
  • Support with Authorities.
With a robust health and safety system in place, through our partners, CLA will be able to source the most suitable liability insurance policy for your needs. Insurers will be able to offer reduced premiums because you will be able to demonstrate that you are managing your risks and helping to reduce your exposure to claims.

To find out more about how working with Health and Safety Assist can reduce your insurance premium and help you to win more business, please contact one of our team.
It is crucial that the correct and most suitable business interruption (BI) cover is in place for your organisation. Insufficient BI cover can result in your business not receiving a full indemnity which can significantly impact on your ability to recover following a loss.

Business_Interuption_InsuranceThere are three main types of business interruption cover: loss of gross profit, loss of gross revenue and increased cost of working.

Each of these covers operates in a different way and there are several reasons why they might be best suited to your particular circumstances.

We explain the differences between these three types of cover and discuss how we can help you choose the most appropriate cover for your business.

1. Loss of gross profit
A gross profit basis is the most common choice of business interruption insurance in the UK. This covers the loss of net profit following a reduction in turnover, standing charges and any increased cost of working.

Gross profit’s key distinguishing feature is that you can specify certain costs to deduct in order to arrive at their final sum insured. These deductions are known as variable costs or ‘uninsured working expenses’ (UWEs), and comprise costs that vary in direct proportion to the reduction in turnover. So, if turnover is reduced by 30% that cost will also be reduced by 30%.

The intention of UWEs is to enable you to not insure costs that will cease in the event of a loss. By insuring on a gross profit basis, any UWEs are excluded, reducing the exposure base to which a BI rate is applied, which means your premium is likely to be less.

However, incorrectly specifying UWEs is a common source of underinsurance, as many customers do not undertake the proper processes required to identify them.

Who is it suitable for?
The gross profit basis was initially developed for customers with many directly variable costs, such as those in the manufacturing and retail sectors. However, as business models have changed, it is no longer the case that these business types are always best suited to a gross profit basis of cover.

Using generalisations about business types is not the correct approach to take, you need to think carefully about what would happen in the event of a loss – which costs would cease and which would continue?

2. Loss of gross revenue
If, having carefully considered loss scenarios there are few directly variable costs, then a different basis of cover, such as loss of gross revenue, may be more suitable. A gross revenue basis covers the reduction in turnover following a loss and any increased cost of working. This could help avoid some of the inherent difficulties in calculating a gross profit sum insured and reduce the risk of underinsurance.

To calculate a gross revenue sum insured, you simply need to know the total turnover of your business for the length of the indemnity period. This avoids many of the intrinsic pitfalls in the gross profit calculation and can help provide a more accurate sum insured where a gross profit basis would bring few or no additional benefits.

Who is it suitable for?
Traditionally, gross revenue has been considered most suitable for the service industry, including businesses such as accountants, solicitors and hotels.

This is because the majority of these businesses’ costs, such as staff and IT, will not reduce in direct proportion to turnover in the event of a loss. These businesses will therefore typically have very few UWEs, giving them less incentive to opt for a gross profit basis, which may leave them exposed if an inaccurate sum insured is calculated.

As mentioned previously however, generalising should be avoided and we would assess your business according to how your particular business operates.

3. Increased cost of working
As detailed above, increased cost of working cover is included within both the gross profit and gross revenue bases, where it is subject to an ‘economic limit’. However, it can also be arranged in isolation, in which case it will not be subject to an economic limit.

Increased cost of working is essentially the bare bones BI cover. It provides the customer with cash to cover reasonable additional expenses that will help the business recover following a loss.

Definition: Increased cost of working
Additional costs incurred in order to prevent a further reduction in turnover.
    These might include:
  • Staff overtime
  • Hiring temporary staff
  • Sourcing alternative premises including rental costs
  • Installing new/temporary means of communication
  • Removal and storage fees
  • Advertising ‘business as usual’
  • Costs of sensitive waste disposal – linked to documents or IT equipment containing sensitive data.
  • Security and fire protection costs – involved with making the damaged location and any temporary location secure
Who is it suitable for?
This basis is only suitable for customers whose business continuity planning and management is such that they will be very resilient to a loss; for example, businesses that are able to easily minimise the impact to their business and might simply require some additional cash to put an established recovery plan into action.

Large multinationals often choose an increased cost of working basis as they might be relatively unaffected by a loss at a single location, have large cash reserves to rely on and may be able to absorb lost capacity in other areas of the business.

How we can help
Business interruption insurance is complex, we will be able to advise you on the best cover for your business.
Employers_Liability_InsuranceEmployers’ Liability insurance is compulsory for any business that employs staff. Following the recent changes to personal injury law that came into effect on 27 February 2017, you may want to consider whether you currently have the right level of cover.

While the statutory minimum is £5m and today’s policies tend to start at £10m, many customers will need a higher limit to adequately meet their needs.

You will find our 6 steps (below) for choosing Employers’ Liability a useful guide.

Rate change highlights need for review
Work-related injuries regularly involve issues of long-term care and loss of earnings. In such circumstances, lump sum settlements can be awarded with the intention of compensating claimants over a long period of time.

As these sums can be invested, a ‘discount rate’ is applied to offset prospective investment returns and ensure claimants are not under- or over-compensated.

Since 2001, this rate has been set at +2.5%, meaning settlements were reduced in expectation of positive investment returns being made.

However, on 27 February 2017, the Lord Chancellor dramatically reduced the rate to -0.75%, meaning settlements will now be increased to reflect expected negative returns.

£10m on a single claim is now plausible
The reduction in the discount rate has immediate implications for the potential size of future personal injury settlements.

The following 6 points should be considered when determining a suitable level of cover:

1. Multiple Claimants
The EL indemnity limit applies to each claim individually. However, work related injury claims can often involve multiple employees.

A claim, or series of claims arising out of a single cause, are considered to be one loss; therefore, thinking should always be framed in terms of whether a limit is sufficient to sustain multiple claimants arising from the same incident.

2. Concentration of staff
Employees are often concentrated in one area, for example in an office or on a building site. In these circumstances, one incident has the potential to harm multiple people.

The more staff concentrated in one place, the higher the limits of indemnity customers should be considering.

Individual claims are now reaching £10m. If multiple staff are potentially at risk you need to be questioning whether your cover is sufficient.

3. Nature of activities
The largest EL claims tend to involve injury as opposed to death, with claimants suffering long-term loss of earnings and the need for continuous care.

You should therefore consider whether customers are engaged in any activities with a higher risk of injury, such as working at height.

4. Hazardous locations
Certain locations are more susceptible to incidents and more likely to involve multiple people.

Common examples include offshore locations, railways and airports.

5. Inner limits
Most EL policies include some common limitations. For example, incidents arising from terrorism or offshore will typically be limited to the statutory minimum of £5m.

While these don’t impact the majority of customers, inner policy limits need to be considered depending on your company’s activities.

6. Future circumstances
EL claims can arise years after the alleged incident – in the case of work-related diseases, this can even be decades later.

Between buying a policy and a claim being settled, a lot can change to affect final settlement values.

The recent change in the personal injury discount rate is a perfect example of this. You’ll want to factor-in some contingency for prospective claims inflation.

Options for increasing limits
You should talk to your broker or insurer if you think higher limits are required.

Sometimes a more economical option is to source an excess of loss policy, which delivers the required capacity above your primary limit. Your advisor will be able to recommend the best option for your company.

How we can help
CLA’s insurance providers can also help customers prevent incidents occurring and significantly reduce the size of claims that do occur.

To find out more or discuss options for increasing limits of indemnity, please speak with one of our team.
The supreme court has ruled that the Employment Tribunal fees paid by employees, if they want to take their employer to court, are illegal.

Employee-Tribunal-FeesHow will this affect your business?
Since the introduction of Employment Tribunal fees in 2013 there has been a 79% decrease in cases being brought. ACAS conciliation service think there will be a large increase the number of cases brought in future. Their records show that 2/3rds of the employees they advised did not proceed with their claim because they would have to pay tribunal fees.

Now these fees have been dropped, you may need to consider how to improve the management of employee relationships in future, to avoid a tribunal claim.

What can you do to protect your business from a claim?
Along with reviewing your HR procedures, you should also check insurance policies to see what sort of cover you have in case one of your employees brings an Employment Tribunal claim.

On your commercial insurance policy, you need to check that you have a Legal Expenses extension. This will cover you for all types of claims including unfair dismissal, discrimination and TUPE claims.
The Legal Expenses insurance will cover your defence costs and any settlements or awards made by the court.

Alternatively, if you have Directors and Officers insurance, this will cover defence costs if you are involved in court cases with employees as well as shareholders, regulators and other organisations.

Employment tribunals can be complicated and therefore time consuming and costly. Making sure you have adequate cover to defend your case will help to mitigate the risk of a costly court case to your business.

Employees in future will have nothing to lose by making a claim against their employer even if they only have a slim chance of winning.

To discuss the best options to protect your business, please call us on 0121 321 4600.
According to the Zurich SME Risk Index, SME decision makers over the age of 55 are by far the most relaxed age group when it comes to the perception of overall risk in the economy.

SME-LeadersAt a glance
  • Just 39% of SME decision makers over the age of 55 see more economic risk now than 12 months ago
  • Although their younger counterparts are more concerned about the economy, they are also experiencing the most growth
  • The survey of over 1,000 SME decision makers showed differing opinions between different age groups
Less than two-fifths (39%) of this age group perceive more economic risk now than 12 months ago. This compares with more than half (54%) of SME decision makers under the age of 45 who perceive more risk now than before the Brexit referendum.

Greatest disparity of economic concern related to age
The survey of over 1,000 SME decision makers showed that the difference in opinion between different age groups was most pronounced when they were asked to assess their exposure to three particular risks: workforce challenges, market dynamics and supply chain issues.

Nearly twice as many SME decision makers under the age of 45 reported challenges to their workforce as their area of greatest concern (50%), compared with just over a quarter (26%) of over 55s. Market dynamics were a primary concern for just over a third (35%) of decision makers over the age of 55, compared with more than two fifths (42%) of those under 45.

Almost a third (32%) of SME decision makers under the age of 45 are most concerned about supply chain issues, compared to less than a fifth of over 55s (19%).

Younger business leaders see the greatest opportunity for growth
It is not all bad news for younger SME decision makers. According to the results, those under the age of 35 are busy seeking out a competitive advantage in the face of economic uncertainty.

Although they were more sceptical about the economy, they were almost twice as likely as the over 55s to see opportunities in emerging technologies.

Under 35s were also the group that saw by far the greatest opportunity in innovative areas of business. The survey shows they are almost a third more likely than over 55s to embrace new practices such as teleworking, or to incorporate mobile technology into their work habits.

This capacity to adopt new technology and working practices may explain why this group experienced by far the greatest business growth. Business leaders under the age of 35 were more than twice as likely as the over 35s to have registered significant growth in the last 12 months.
At a glance
  • Fires involving hot works often spread rapidly and cause significant property damage.
  • Our provider’s claims experience shows many hot works fires could have caused much less damage – or been avoided altogether – if the hot work permit system had been adhered to.
  • We discuss three major fires involving hot works, and identify lessons organisations can learn from them.
Hot-works-risksFires involving hot works may be rare, but when they occur, the damage to property is often substantial. Sparks can quickly spread to neighbouring buildings and cause fires that are hard to bring under control.

Investigations into the causes of hot work fires often find they could have been avoided if proper safety procedures had been observed.

Examples of three recent incidents:

Case study 1
This fire occurred during the school summer holidays. Plastic tarpaulin caught light as a gas torch was being used, and the fire spread rapidly, destroying much of the school. Subsequent investigations identified a number of failings that meant the risk of a fire occurring had not been adequately addressed.

The biggest issue in this incident was that there was no hot work permit in place to ensure the works were being managed safely.

In addition to that, materials were being stored on the roof where the works were taking place and there was no fire extinguisher on site.

The absence of a fire extinguisher may have put the contractor in breach of their Hot Works Warranty, as their insurer refused to indemnify them following the loss.

Case study 2
Hot work permits specify that for torch-applied roofing, a fire watch must remain in place for at least an hour after work has finished for the day, to ensure all sparks and embers in the site area have been extinguished.

In this incident, the contractor left the site before the one-hour fire watch period had elapsed, and it was during this time that a fire took hold. Had the contractor stayed on site, the damage could have been minimised considerably.

Although there was a hot work permit in place on this occasion, it was the contractor’s permit, and nobody from the school had oversight of it.

It may also have been possible for cold works to have been used instead, but no explanation was given as to why this option was not chosen.

Case study 3
This fire occurred at a particularly sensitive time – as students were returning to school to collect their GCSE results.

Combustible materials caught light as maintenance work was taking place on the roof of a two-storey building that housed a library and IT facilities. Although the fire was spotted quickly, it spread so rapidly that the whole of the building was destroyed.

Although there was a hot work permit in place, managed by the contractor, it didn’t achieve a great deal and appeared to be more of a box-ticking exercise.

One of the problems identified was that it was a generic permit for a larger programme of works taking place at the school; the permit wasn’t specifically created to manage the risks associated with hot works.

In addition, there was no proper oversight of the permit. It was kept in the contractor’s cabin and the only person who saw it was the individual who had issued it.

Learning lessons from hot works fires
Losses from fires involving hot works can sometimes run into millions of pounds. Indeed, in one recent claim, the loss was estimated at nearly £20m. Careful management of the associated risks is therefore essential.

One of our provider’s loss adjusters, has conducted a review into the causes of hot works fires, which found evidence of:
  • Inadequate or cursory work area inspections.
  • A failure to properly brief those carrying out hot work on the nature of the works.
  • Poor project oversight, including the way that subcontractors are managed.
Following its review, our provider’s recommended that individuals responsible for authorising hot works ensure that:
  • Less hazardous work methods have been considered.
  • Project specific work and method statements have been compiled.
  • Worker qualifications have been checked.
  • A work area risk assessment has been conducted.
  • Those carrying out the work have signed an authorisation to work as per the agreed method.
  • Periodic inspections are carried out.
  • A final check on the works area is made at the end of each working day.
For more information on managing hot works and other fire risks, please contact us.
Business-threats-2017Allianz has produced their Risk Barometer for 2017 which identifies top three corporate perils for UK businesses.

The figures are based on the responses of more than 1,200 risk experts from 50+ countries.

At the top of the list in the UK is cyber incidents with 48%. The toughening of data protection regulation put this at the forefront of risk experts’ minds, as penalties for non-compliance will be more severe.

Second was business interruption (BI). Physical perils such as fire and explosion are top causes of BI that businesses fear most, but non-physical or non-damage causes are becoming a much bigger issue; for example, supplier failure or cyber incidents.

Macroeconomic developments moved up from sixth position last year to third.

Cyber insurance
It is no longer a case of, if your business suffers a cyber-attack, but when. Cyber-crime has moved to the top of Allianz’s barometer with hardly a week passing without the media reporting a high-profile case of hacking or ransomware attack. And this does not include smaller businesses where breaches go unreported.

Cyber insurance can provide the cover that could be the difference between the survival or bankruptcy of your business.

Business interruption insurance
Disruptions can be caused by a wide variety of risks; fire, flood or a leaking pipe. Your commercial insurance policy will cover the material losses, but if your business is forced to close following an incident, this is when business interruption insurance is invaluable.

The policy will cover loss of income following an insured incident.

Macroeconomic
It is not surprising this has moved up the Risk Barometer in 2017, with more uncertainty, driven by growing concerns over political, legal and regulatory developments globally.

Allianz possess strong underwriting and risk management capability which means they can offer cover and access to business specific risk guidance ensuring that businesses are properly protected.

To protect your business from business risks in 2017, talk to one of our account executives at CLA to find out more.
The most valuable assets of small and medium sized enterprises (SMEs) are their employees.

Interruption to the workforce – whether through employee travel disruption, injury or death – can therefore result in significant financial loss, with a greater relative impact to smaller organisations.

We look at why Personal Accident and Business Travel (PA&BT) should be viewed as an essential cover for businesses of all shapes and sizes.

Employee-business-travel-insuranceProtecting your most valuable assets
Wage roll is often an SME’s biggest expenditure, and employees its most valuable resource. However, while most businesses wouldn’t hesitate to fully insure their physical assets, many still fail to adequately protect their human resources.

“Although legally you only have to purchase third-party motor cover, most businesses will opt for fully compressive without hesitation,” says Adrian Littler, Managing Director at CLA (Risk Solutions).

“A vehicle can be easily replaced, but its driver is a complex mix of knowledge, skills and experience. Their loss can be very damaging to a business. It’s therefore hard to understand why a business would insure its vehicle but not the person driving it.”

A business interruption issue
Any business will be affected if an employee is unable to do their job for whatever reason. However, the smaller workforces of SMEs are especially susceptible to the potential business interruption and financial loss this can cause.

While larger businesses may be able to quickly find capacity elsewhere in their organisation, the loss of key personnel is likely to result in a greater disruption to an SME.

The fixed benefits provided by Personal Accident (PA) insurance can be used to offset lost revenue or cover additional expenses incurred, such as recruitment and extra staffing costs.

Business Travel (BT) will ensure major expenses are covered when something goes wrong during a business trip. Through the additional benefit of CLA’s Travel Assistance services, situations will also be resolved quickly and with minimal disruption to the insured’s business.

Satisfying your duty of care
Every employer has a legal obligation to formally risk assess their employees’ work activities and reasonably manage any red flags identified. This includes sending people on business trips, which can introduce a wide range of additional risks for SMEs to consider.

Purchasing a comprehensive BT policy is the simplest and most effective way for SMEs to evidence a commitment to health and safety compliance, and should be viewed as a minimum standard when sending employees away for business.

Don’t rely on employees’ own cover
Many SMEs do recognise the importance of PA&BT cover, but may look to rely on employees’ own coverage, often given free with bank accounts and credit cards. However, these policies are usually far more limited than a dedicated PA&BT policy, and many may exclude business travel altogether.

Protecting your customer’s reputation
In addition to demonstrating legal compliance, many SMEs also view holding adequate BT cover as a moral obligation to employees. Requiring employees to hold their own insurance, or asking them to travel with no cover at all, risks harming a business’s reputation.

For example, in autumn 2016 a lorry driver died in his cab while working in Italy. His employer collected the vehicle but told the family that they would need to fund the £22,000 to repatriate his body. The incident was widely publicised and caused the haulage firm significant reputational damage, which would have been avoided had they held even basic BT insurance.

Ensuring cover delivers on its promises
It is important to help customers appreciate the value of opting for a leading PA&BT provider, instead of simply choosing the cheapest cover.

For example, our insurers offer a £250,000 fund for use in the event of catastrophic injury. This can be drawn upon for a variety of activities, such as retraining, undertaking adjustments to the workplace and home, or employing someone to co-ordinate on-going medical needs. Professional psychological treatment is also available to families following an accidental death.

UnderinsuranceSmall and medium sized businesses need commercial insurance to cover their premises, contents, machinery and equipment. If you are sourcing your business insurance online and your only consideration is to minimise the cost of the premium, you may find that your insurance cover leaves you out of pocket if you need to make a claim.

Underinsurance is a common problem. 40% of businesses do not have enough business interruption cover to get them back on their feet (Building Cost Information Service 2012).

Rebuilding costs
The sum insured should take account of the actual rebuilding costs, not the market value. Depending on the type of property, reinstating the building back to a useable position following an incident may cost more than you think once you include materials, labour and professional fees, not to mention loss of earnings during the rebuilding period. In 25% of SME claims reviewed by the FCA, the indemnity period expired before they returned to a normal trading position (FCA thematic review of SME claims TR15/6 2015).

Business interruption insurance
The consequences of an insured incident could result in reduced or complete loss of income from your business for an unknown period. It is therefore important to check how long the indemnity period is on your insurance policy. Two years is likely to be needed for a business to fully recover to its original trading level.
These calculations can be complicated, considering all of the eventualities that could delay getting your business back up and running; for example, delays in planning permissions when rebuilding, long lead times for replacing stock or machinery and replacing customers lost due to downtime.

This is where a broker can offer their expert advice. Depending on your business circumstances they may suggest a declaration-linked, non-average basis of insurance, because it provides an uplift of 33% providing that the sum insured is correct initially and declarations are made when requested by insurers. Alternatively, a policy that is based on the estimated amount of gross-profit or revenue that you expect to earn.

Legal liability claim
Claims against your business can come from a variety of risks and insurance is designed to provide adequate levels of cover of usually £5 to £10 million. The types of cover to consider include:

  • Employers liability
  • Public and products liability
  • Directors and officers liability
  • Cyber threats
  • Environmental liability
  • Professional indemnity

You will have to assess the risk levels within your own business to determine whether the level of cover is going to be enough for your individual circumstances.

Benefits of using an insurance broker
Insurance is complex and it is not easy to assess all of the risks associated with your business and to select the most suitable insurance policy to meet your needs. Get it wrong and you could jeopardise the future of your business.

An insurance broker will be able to offer advice and select the most suitable policy for your business. They can arrange accurate valuations to ensure you have exactly the right amount of cover in place when you need it.

Penalty-for-driving-with-mobile-phoneFrom 1 March 2017, drivers caught using their mobile phone whilst driving will receive a fine of £200 and 6 penalty points on their license.

Previously the penalty was £100 and 3 penalty points with the option of taking a remedial course instead of points on their license. The remedial course will no longer be an option.

This will mean that newly qualified drivers will have their driving licences revoked if they receive the 6 points within 2 years of passing their driving test. Drivers of goods vehicles and passenger carrying vehicles with more than 9 seats could face a fine of £2,500.

Hands-free devices such as Bluetooth earpieces or hands free kits are still legal.

Definition of hands-free
So long as you only have to press a button to receive or end a call you are allowed to use a hands-free device. Multiple presses are illegal.

Therefore, you can use your mobile phone whilst driving, if it is connected to a Bluetooth earpiece or hands-free kit, providing your mobile phone is cradled on the dashboard or windscreen.

However, if you are involved in an accident whilst on the phone, you could still be prosecuted if the police think you were not in proper control of the vehicle or driving without due care and attention.

Research shows that using a hands-free device whilst driving is just as dangerous as using a hand held phone because it is still a significant distraction from driving. Drivers using a mobile phone whilst driving are four times more likely to crash, injuring or killing themselves and other people*.

Employers
As an employer, you have a duty under health and safety laws to manage the risks faced by your employees on the road and you should provide them with clear guidelines on the use of mobile phones whilst driving.

You may want to get some professional advice on assessing the risks to your employees and drawing up guidelines that will keep you safe from prosecution. Visit our website home page to find out more from our “Health and Safety Assist” partners.

*http://www.rospa.co
You may have heard about these changes in the news recently, following an announcement from The Ministry of Justice.

Ogden-Discount-TablesThe Ogden tables are used by courts to make it easier to calculate future losses in personal injury and fatal accident cases.

The tables provide a set of discount rates that make sure a severely injured person has the necessary financial security to provide for their care and loss of earnings. The discount rate is used to calculate the amount of compensation they receive to reflect the return they will earn when that money is invested.

It was announced recently, by the Lord Chancellor, that the Ogden discount rate will be reduced from 2.5% to -0.75% from 20 March 2017.

The change has been made to reflect the fall in indexed-linked gilts which are used in the calculation. However, the insurance industry believes that the system used to calculate the discount rate is flawed and does not take into account the current investment environment and the financial choices available for claimants.

The outcome of this reduction will mean that those suffering from serious injuries will receive significantly higher compensation payments than before.

The increase will affect claims costs for all types of for bodily injury in the following sectors:
  • Private and Commercial Motor
  • Motor Trade
  • Casualty (Employers Liability, Other Liability and Contractors Liability)
  • SMEs
Reducing this rate will cost the insurance industry millions of pounds and the news has already caused share prices fall. As a result, it is expected that customers will see an increase in their premiums in the future.