With the UK in the deepest recession since records began in the 1950's, it is hardly surprising that the Commercial Insurance Sector has seen it's customer base shrinking faster than the Royal Mail says it is losing hand written letters, and one would have thought that the beleaguered business insurance sector would have little to look forward too in the new year....
However, things are not always what they seem and as Kris Oldland reports, there appears to be green shoots of recovery for the spring........
SME Commercial Insurance Sector sees promise in 2010
After a year which has been tricky for some and catastrophic for others we could be forgiven for looking towards 2010 with some trepidation and in some of the more morose corners of industry dare we say it, a heavy dose of doom and gloom? Well those hardy soles in the ever exciting SME market are having none of it – despite the sector being hit harder by the recession than most.
At least that is what the results of a recent report from British communication giant BT would seem to suggest.
The 2009 BT Pulse report has revealed that an overwhelming three quarters of SME’s predict the economy will see an upturn in 2010. Further to this over 60% of the respondents were confident about their businesses prospects for the coming year and an impressively confident 35% even predicted their situation will have improved as soon as January 2010.
The report surveyed 7,200 Directors of small and medium sized enterprises and a strategy director at BT commented that the findings “show that the economy is at a tipping point. Despite the obvious knock to confidence, positivity about when the upturn will come is encouraging.”
With 45% of the respondents going as far as saying that they have streamlined their business so that they are now operating even better as a result of the downturn, it seems that many of these SME operators are primed to thrive as soon as the market catches them up.
These bold predictions have also been echoed by the Institute for Chartered Accountants in England and Wales (ICAEW), who have also recently released a similar statement that “confidence among business professionals has turned positive for the first time in two years.”
However not all quarters of the UK industry are predicting quite such a swift return to the good times as the British Chambers of Commerce (BCC) has issued a slightly more ominous statement that although the recovery may have started, the economy still faces considerable risk.
According to the organisation, GDP will drop by 4.3 per cent this year, followed by growth of 1.1 per cent in 2010 – an improvement on the BCC’s June prediction of 0.6 per cent.
David Kern, chief economist at the BCC, says: ‘While we expect a gradual improvement over the next two years, the pace of UK expansion is likely to be weak by pre-recession standards. It is critical that wealth-creating businesses have adequate capacity to respond to an upturn in demand when the recovery strengthens.’
However despite the general confidence, many SME’s are still walking a dangerous tightrope leaving themselves unnecessarily open to adverse risk as they cut their policies and leave themselves underinsured.
Of course should these buoyant entrepreneurial companies live up to the high expectations they are piling upon themselves then it follows that their insurance needs will grow too and with the aid of a good broker they may just be able to manage the balancing act of ensuring that their cover is adequate and competitively priced.
With the SME sector looking once again to rise like a phoenix from the ashes the role of the high street commercial insurance brokers could once again become a crucial link between the sector and the general insurance industry.
About the Author:
Kris Oldland is an Insurance Journalist with particular interest in Commercial Insurance and UK business Insurance
Risk Management - Transport Sector heading in the right direction?
Transport Sector heading in the right direction?
By Insurance Blogger Kris Oldfield
Call it a credit crunch, an economic downturn or just a plain old recession the current financial situation is impacting in some form or another upon just about every single one of us and in many cases we having to adapt to survive. A recent survey by Marsh has highlighted the changes in attitude and strategy that are moving through the transportation and haulage insurance sector with nearly three quarters of Europe’s leading transportation firms set to review their approach to risk management in the near-term.
With just over half the respondents admitting that the Transportation sector had been hit harder than others the general mood is one of caution. Tellingly the research also shows that more than 80% of those questioned felt that Risk Management was of a much higher priority amongst senior management at their organisations since the economic downturn.
However despite the overwhelming majority of respondents seeing the need for re-assessing their risk management strategies, the research suggests that there is not necessarily a reduction in risk appetite as one may assume. The amount of respondents who felt that their board had become more risk adverse was equally matched by those who saw no change in their risk appetite (40%). Interestingly there was also a sizeable faction (14%) who believe that their organisations have actually increased their risk appetite as they look to prosper, by boldly maximising the opportunities created by their competitors caution during the downturn.
Unsurprisingly the biggest concerns in the sector are customer debt and in the near-term, credit risk. Nearly two thirds of the respondents stated that customer debt was their most significant concern with many citing the increased risk of credit lines and delayed or non payment as some of the key challenges they face. Over a quarter of all respondents also admitted that credit risk was a concern for their organization and one in six admitted that their company was either ‘fairly’ or ‘significantly’ affected by the reduced levels of trade credit available at present.
Mark Pollard, head of industry practices for Europe, the Middle East and Africa at Marsh, commented that it was unsurprising that the European Transportation sector felt that it had been hit particularly hard by the recession as the industries primary function is the delivery of goods and passengers – demand for which historically has been shown to decline in periods of recession.
However in addition to this Pollard added that the fact that firms have been able to use the recession as a springboard to make essential reviews to their approach to risk management and improve upon their existing resilience was “extremely encouraging”.
With nearly a third of those surveyed confirming that they anticipate increasing their risk management spend, the signs seem to indicate that Pollard may well be correct – especially as this comes at a time when many other areas of business are being subjected to ruthless budget reviews and cost cutting measures. In fact less than 10% of Transportation companies have indicated that they believe that they will be reducing the expenditure of their risk management budgets, a statistic that seems a clear indicator of the direction in which the sector is now heading.
-------------------------------------------------------------------------------------------- InsuranceBlogger is not surprised that Risk Management in the Transport sector is thriving despite the recession. The recession itself has led to an increase in haulier cargo insurance and marine cargo insurance claims through piracy and modern day Dick Turpin highwaymen. The old adage 'it fell off the back of a lorry' appears to never has been as true, as the rise in cargo and goods in transit theft continues despite major Police offensives. InsuranceBlogger believes that the 'black economy' is the main driving force behind this as consumer spending polarises to the 'boot sale' economy. Watch this space for a detailed look at risks to the haulage industry!
Commercial Insurance Explained - Small Business Insurance Advice
Small business insurance or commercial insurance for enterprises has suffered in parallel with the decline in commercial and entreprenuerial activity in the UK and worldwide during the last six months. Consequently those offering cover have to be more inventive, cutthroat in pricing or superior in their risk assessment in order to maintain decent profit levels. This background to UK Commercial Insurance has been altered largely by the large number of new Internet suppliers, finally offering commercial insurance for small business propositions online. This has not only impacted upon consumers as a wider choice of business insurance products, but the downturn in the economy has meant that what should be hard premium rates are in fact fairly soft. Add to this the number of illegal claims that businesses always make during a recession and you are potentially sitting on a very explosive if some what interesting market.
Despite the recession there are many small business start-ups hasppening at the moment so we reprint on of Insurance bloggers articles here that explains to small and large businesses the wide and varied range of commercial risks that need to be assessed on an individual company level and purchased appropriately.
Understanding Commercial Insurance Risks and Business Insurance Covers By Dave Healey
If you own or manage a business, either large or small, you will require some type of insurance to protect your company against the various risks and potential multitude of claims, that your business will face.
Commercial insurance or Business insurance as it is commonly known, is a complicated area of underwriting and because all businesses are different, and face different risks depending upon the nature of the company, various packages and combined policy covers have been introduced by insurance companies and commercial broker schemes, to make the process easier.
An example of a small business insurance package which is commonly sold online is the Tradesman's insurance package, which includes all elements of cover required by a small business or self employed trader such as basic liability covers and theft of tools.
Other small business insurance packages that are trade specific and can often be obtained online are available for shopkeepers, offices, surgeries, hotels and guest houses, restaurants, public houses and builders.
Large companies will be offered what is known as a commercial combined policy which has many different elements of cover which can be combined to make a bespoke policy for the enterprise. Most large companies will require some degree of risk assessment before the policy is underwritten, which may often include a visit to the business premises or site, and for this reason these types of larger business usually employ the services of specialist commercial insurance brokers.
Business Insurance Risks
The largest risk that a business faces is from liability to others, and the potential costs and damages a company could face if a claim was made against it.
All companies are required by law to have in place liability cover, called Employers liability insurance or EL, to protect their staff against all potential risks and accidents while in the workplace.
Business liability insurance is usually sold as a package and will always include Public Liability, often just known as PL, which protects the company against claims from the public whilst on the business premises.
A further type of liability insurance called Product liability is also available to companies under a commercial liability policy which protects the company against claims made for design or manufacturing faults in the product.
Company directors can also protect themselves against liabilities with Directors and Officers insurance (D&O) cover.
Property Damage
Most business large and small will have premises that need protection against buildings perils such as fire and flood and commercial property insurance is available to cover all buildings insurance risks. Similarly commercial contents insurance for business premises is available which covers office and business equipment including files and data processing against the common perils. For companies that carry stock, this type of business contents insurance can be extended to cover risk such as deterioration and damage.
For the small businessman who works from home these covers are often available with strict limits of indemnity, as a bolt on to a standard home buildings and contents policy. This type of cover is often effective for self employed people with just a computer and a home office.
Business Contingency Cover
One of the largest problems faced by a business is that of how to continue in business should the worst occur, for example a fire that destroys the premises. In order to deal with this Insurance companies have devised a cover called 'Business Interruption Insurance'. Based on your previous years annual turnover, this protection insurance covers your company against all losses caused by interruption to trading due to any of the perils mentioned on the policy and will pay out on a indemnified basis for the period of cover agreed in the policy. Most policies will also offer some type of alternative trading accommodation to enable you business to continue whilst the premises are being repaired.
Additional Commercial Insurance Risks
Because commercial insurance is designed to cover all classes of business, there are many various trade or business specific covers available which can be added to a combined policy. Examples of these covers include loss of licence to trade, glass cover, goods in transit cover, book debts, commercial vehicle insurance, hauliers cover, warehouse cover, engineering insurance and plant inspection services, and theft by employees.
Outside of most commercial combined policies are additional risks, more often sold under separate policy covers, that should be considered to protect your business against all eventualities.
Examples of these are, Commercial Legal Expenses insurance cover which protects the company against claims made by employees for unfair dismissal and allows you to bring cases against suppliers.
Various protection policies are also available for businesses including Keyman insurance which provides cover against the loss of key people within your organisation. Business mortgage protection provides a monthly payment for business premises should you suffer and accident or sickness. Group ASU policies are also available to protect your staff and employees.
Purchasing Business Cover
Purchasing commercial risks insurance can be a daunting experience for the uninitiated small business owner and unless the risks are straightforward and can be underwritten online, it is advisable for all companies to approach the services of a local or regional commercial insurance broker. Insurance Brokers will not only be able to assess the complete range of risks that your business is exposed to, and provide the correct levels of cover, they will more often than not have a unique local knowledge of the risks involved and will be able to negotiate premiums that reflect the nature of the risks. Furthermore, in the event of a claim, and as most businesses will be faced with claims at some point in their trading life-cycle, the broker will handle all the settlement negotiations with the insuring company and allow you to continue what you do best - running your business.
Commercial insurance and tradesman risks covers for small business insurance are widely available online today. For larger commercial enterprises it is strongly advisable to visit commercial insurance brokers for a detailed assessment of the risks your particular business is exposed to.
Doomsday UK – Swine fever pandemic ravages British Economy
Within days of the closure of the last schools, the final tube train stopped signalling the immediate closure of the UK’s public transport network for the foreseeable future. Snakes of lorry convoys with armed police motorcycle outriders have been seen moving around the country’s motorways, ensuring vital supplies are getting delivered. The halt of Petrol (Gasoline) sales has prevented the movement of most private individuals. What’s vital? If the newspaper shop on the corner doesn’t get any cigarettes in soon he’ll probably get burnt out! Most businesses have been shut for over a month now under local community orders. Around the country local authority disaster action plans are in full swing and restrictions of movement of goods and people, are in place. Rioting is reported in some urban centres up and down the country by the major British TV networks, although the coverage is poor with outside broadcasts rare. Rubbish piling up in the streets and rats are not helping the problem, as victims of swine fever as it is now known succumb to other diseases. Everyone calls it Swine Fever since the H1N1 swine influenza virus mutated into the deadly strain. Bodies are going uncollected and unburied as the number of fatalities rises. The most up to date information can be found on remote UK Internet TV stations such as YouTube or Ustream. It looks well bad in India………Even worse in Cornwall...
No seriously we really do think it just media hype! Although a major viral crisis would damge the UK economy. Uncertainty and fear have been jamming the enquiry lines of call centres of UK insurance companies and brokers, up and down the country this week, following the sporadic outbursts of Swine Flu, influenza variant strain H1N1, associated with travellers returning home after vacation in Mexico. Unlike the questions regarding travel insurance which have been covered extensively in the national press, it appears the UK public are more concerned about their individual personal covers, should Swine Flu become pandemic. We asked some of the UK’s leading Insurance Business characters for their thougfhts on how Swine flu in the UK, was going to affect their insurance products and claims.
Hayden Powers, Customer Services Manager at Burgesses Ltd the UK’s largest online supplier of independent income protection insurance and mortgage protection insurance for Sickness and ASU products http://www.burgesses.com explained, “The majority of sickness insurance protection products sold by online independent providers such as ourselves in the UK, cover Flu and it’s associated sickness, and we can assure all our clients and direct customers that they are covered ‘back to day one’ of a period of sickness caused by swine flu. It is important that a sickness insurance policy includes the back to day one cover, as most income insurance and mortgage payment protection policies for sickness have a thirty day excess period before you can claim. If your swine flu sickness period only lasts three weeks and you have a thirty day excess period with no back to day one of your sickness cover, then you will not be able to claim.”
Robin Rankin of UK Commercial Ltd http://www.uk-commercial-insurance.com the online UK Commercial Insurance broker network, confirms that many small business owners are very concerned about the effects of swine flu on their business. He said, “They are concerned about the interruption to their business that widespread Swine Flu might bring. We have had enquiries as diverse as from freight forwarder insurance customers that do business in Mexico with imported goods, through to clients who have Keyman insurance who are concerned about business continuity if these key players fall victim to the flu. However most enquiries have been from small businessmen concerned about additional pressures on their already struggling businesses that swine flu might bring, in particular business insurance coverage under the contingency sections of business interruption. A major problem will arise if companies are forced to close due to a swine flu pandemic, and the nature of the risk becomes fundamental. In this scenario the UK Government will have to step in to rescue falling businesses.”
Dave Healey underwriting expert at online specialist car insurance comparison site http://www.car-insurance.tv warns of the dangers of driving with swine flu. He said, “We are warning our clients against driving if they are suffering the effects of flu or on medication prescribed due to having contracted swine flu. Aside from any legal obligations, persons doing so are at a much higher risk of having an accident”
It’s apparent that the UK insurance industry is bracing itself against the Swine flu outbreak as the situation worsens, but it is as yet unclear whether they are in a proper position to deal with a full scale influenza pandemic, as seen in 1918 with Spanish flu.
Good news is that despite all the bad economic news and the credit crunch, productivity is up. There has been a hundred per cent drop in the number of employees calling in sick saying they have the flu!
Peter Mandelson the UK government's Business Secretary has announced a series of measures designed to help small to medium sized UK Businesses (SME) solve their current cash flow liquidity, credit and investment problems The support package entails the Government underwriting loan guarantees and the founding of a new Enterprise Fund designed to help SME companies struggling to access loans for working capital, wages and company investment.
The Government measures include:
* A £10bn Working Capital Scheme, securing up to £20bn of short term bank lending to companies with a turnover of up to £500m
* An Enterprise Finance Guarantee Scheme, securing up to £1.3bn of additional bank loans to small firms with a turnover of up to £25m
* A £75m Capital for Enterprise Fund (£50m from Government augmented by £25m from the banks) to invest in small businesses which need equity
Whilst we welcome measures to assist small businesses during the current credit crunch for falling into liquidation, questions must be asked of a socialist Governments role in underpinning a free enterprise society.
SME businesses can save on their commercial insurance in 2009 by shopping around the many online business insurance websites that now offer commercial insurance packages online for virtually every trade and profession.
Are you a small business owner? Do you feel that your voice seldom gets heard? If so we know how frustrating that can be especially if you feel passionate about your business or trade.
Any way the good news is you can now do something about it - well you can shout loud and will get listened to! UK Commercial Insurance Ltd the Uk's largest online small business commercial insurance provider, has asked us to point out to you a forum run by the Federation of Small Businesses where you can exchange passionate views with members not just of your own trade but issues which affect all small businesses including small business insurance
You can find the forum at the Federations website http://www.fsb.org.uk You wil need to register to participate, which is a simple process, but the posts make very interesting reading alone.
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Freight Forwarders and Hauliers Insurance at risk?
