Following BT’s recent announcement of the withdrawal of their Redcare Alert security system, our latest blog discusses how to select a new security system.
Any business that relies on computer systems to store or transfer data is exposed to cyber risks. In today’s digital world, this is most businesses. With more businesses than ever investing in Cyber insurance, we have outlined five things to consider if your business has not purchased this type of cover
In their positions, Directors and Officers have specific duties, responsibilities, and powers. One incorrect move or decision means they can be personally scrutinised by employers, shareholders, and regulators and therefore board engagement with Directors and Officers (D&O) also known as Management Liability insurance, is vital.
We previously held a webinar with expert panellists Gary Gallen, Founder and CEO of specialist law firm rradar, and Nick McGarey, Underwriter at Beazley, who mentioned that in both the legal and insurance sectors, they are seeing an increase in litigation and claims against businesses and senior management teams.
Our panellists provided the following top tips to protect yourself as a Director/Officer:
It is important to remember that Executive Directors, Non-Executive Directors, Shadow Directors, and Officers, including those who have retired, can be held culpable for Directors and Officers claims so now is the time to consider your personal protection.
We are here to help
If you would like to discuss your personal exposures further, or for more information about Management Liability insurance and what it covers, get in touch with Jason Cohen:
Claims inflation continued to be a priority topic for insurers in the UK and worldwide. Increased litigation costs, increases in psychiatric injury claims, and expensive commercial care packages are creating challenges for insurers.
According to Lloyd’s of London, claims inflation refers to the change in the cost of claims of a like-for-like policy over a period1. Claims inflation is the sum of ordinary economic inflation and excess inflation.
Excess claims inflation is the increase in the cost of a claim beyond that of ordinary economic inflation, which is driven by many different types of inflationary factors such as:
In addition to the above economic excess claims inflation factors, social inflation is a subset of excess claims inflation. It is referred to as social inflation because the increased costs are largely attributed to social trends or movements. The ‘social trends’ that are increasing the volume and costs of claims include:
The cost-of-living crisis, professional services spend, the cost of care, and new categories of claims are key inflationary factors driving up the volume and cost of personal injury claims. For example:
The impact of COVID-19, greater use of social media, and the impacts of the cost-of-living crisis have been identified as some of the reasons for the increase. It is also speculated that awareness efforts have contributed to the rise in individuals seeking help for their mental health. In early 2023, the UK government announced £150 million of additional funding would be allocated to mental health services.
Employee mental health and wellbeing have also become a strategic business priority, which is now part of the ‘S’ of their ESG strategy. Simon White, ESG Director at MX Underwriting talks about what the ‘S’ means in ESG here.
Increasing care costs are a significant reason for claims inflation in England and Wales. This has impacted both claims for non-commercial care voluntarily provided by family and friends as well as commercial care required in more complex cases.
Commercial care costs for both directly employed and agency care have also been driven upwards by a shortage of carers and the rising cost of living. Brexit, the pandemic, and a lack of suitable candidates have helped drive these shortages at the very time when there is an increasing demand for care due to the aging population.
In addition, the care sector is suffering from high turnover rates and poor staff retention with other sectors offering better pay, more sociable hours, and better working conditions.
Amputation claims have been subject to hyperinflation in recent years and there are several reasons for this trend. The costs of prosthetic devices continue to increase which can be partly attributed to continued technological developments designed to increase levels of function for amputees.
However, even without technological advancements in prosthetic devices, the market is typically seeing price increases of between 5% to 8% per annum for the same products caused by a combination of general economic pressures in the UK and limited competition in the industry.
New surgical techniques such as targeted muscle reinnervation (TMR) or osseointegration (where a titanium rod is implanted into the stump to which the prosthetic is attached rather than the conventional prosthetic socket) can also add an additional layer of costs.
The recent judgments of Swift v Carpenter [2020] and Riley v Salford Royal NHS Foundation Trust [2022]2 have assisted claimants in their efforts to push the legal boundaries and are often cited by leading claimant firms in relation to accommodation, life expectancy and loss of earnings.
Finally, the catastrophic nature of injuries suffered by amputees means that there are often claims for inter-dependent losses of accommodation and care which have also been subject to inflation in recent years.
Fraudulent claims typically rise during economic downturns. This flux and uncertainty compared with previous economic downturns causes delays in claim processes and increases costs.
The economic downturn has also seen a significant rise in opportunistic property claims in both residential and commercial lines. In commercial lines, arson and escape of water claims remain prevalent as COVID-19 bounce-back loans and general government support have been withdrawn
Specialist Risk Insurance Solutions (SRIS) Claims Director, Justin Welham, comments:
“Whilst not as obvious as the property sector, claims inflation is also starting to have a real impact on casualty claims.
Rising inflation means that the Judicial College guidelines, used to assess general damages claims for pain, suffering and loss of amenity, are quickly out of date and claimant solicitors are looking for higher damages.
We are already starting to see a relatively sharp increase in the average value of general damages paid, which in turn will drive up renewal premiums. As part of our risk management offering, we actively engage with clients to ensure that the appropriate loss control measures are in place to prevent accidents occurring in the first place.
When accidents do happen, our award-winning claims team are on hand to walk the client through the process every step of the way.”
For more information on claims inflation and how this may impact you get in touch with our expert team.
Find out more about what’s driving Motor claims inflation.
Sources:
1 https://assets.lloyds.com/media/8a9d0449-0d0d-41f4-bf76-7de7bc289293/Allowing%20for%20Claims%20Inflation%20in%20Reserving%20-%20Lloyd%27s%20Reserving%20Thematic%20Review%202022.pdf
2 https://www.dacbeachcroft.com/es/gb/articles/2020/october/swift-v-carpenter-the-answer-to-accommodation-claims-or-just-a-halfway-house/#:~:text=Published%209%20octubre%202020&text=In%20summary%2C%20the%20Court%20allowed,discount%20rate%20of%20%2B5%25.&text=Roberts%20calculation%20(%2D0.75%25%20DR,%2D%C2%A3371%2C385%2C%20so%20NIL
In 2021, the COVID-19 pandemic was dominating news headlines, now, the cost of living and inflation rates are today’s headlines – but how did we get here? This article drafted by our Group claims specialists provides an overview of some of the specifics that are driving inflation rates and as a result, claims inflation.
The impact of Brexit has disrupted supply chains because it has called for new negotiations for cross-border trade. This has resulted in added cost, complexity, and delays in shipping. Some suppliers have even downgraded the UK as a priority market because of Brexit.
Brexit also created a skill shortage, and regulatory changes have made working in the UK less attractive to EU nationals who are increasingly returning home.
UK unemployment is low, which has resulted in high vacancies and more competition for increased salaries, the lack of skilled labourers required for construction, alteration, and reparations of buildings.
The world is seeing record highs in the cost of petrol and diesel, which has been driven by supply challenges. Freight shipping costs have more than doubled since 2020, and machinery and plant have longer lead times as a result, particularly with items that are manufactured outside of the UK1.
We are also beginning to see major impacts of global warming, in the form of increased storm and flood frequency and severity. This coupled with inadequate investment in drainage infrastructure in the UK is adding to the damage.
For example, Flood Re estimates that flooding will have increased between 25% and 80% by 2050, depending on the rate in which weather temperatures increase2.
Specialist Risk Insurance Solutions (SRIS) Claims Director, Justin Welham comments:
“In the property market we’ve seen post-pandemic supply chain bottlenecks, higher energy and transportation costs, and shortages of labour all contributing to higher inflation in 2022.
In 2023 we’ve seen that the war in Ukraine has further fuelled global inflationary and supply chain pressures, causing price shocks for a wide range of commodities, including energy, food and construction materials. This Supply chain disruption and rising prices are driving up replacement and rebuilding costs for property and construction claims.
This will inevitably leave companies exposed to under-insurance across their property portfolios. Our team continue to work closely with our clients in terms of costs mitigation and making sure that their property portfolio sums insured have been recently reviewed to avoid the pitfalls of under-insurance.”
Find out more about why claims inflation in relation to liability.
Sources:
1 https://www.axaconnect.co.uk/siteassets/broker-documents/commercial-lines/product-support-documents/guide-to-property-claims-inflation.pdf
2 https://www.floodre.co.uk/wp-content/uploads/Flood-Re-Response-to-Principles-20Aug2020.pdf
Inflation has stretched across all industries, and Motor claims is no different. This article drafted by our Group claims specialists outlines the overarching reasons and consequences you’re likely to hear about and experience.
The pandemic impacted supply chain as the world was placed on ‘lockdown’. This resulted in a shortage of semiconductors, which are computer chips used in a wide variety of technological products. For example, a fuel car requires upwards of 40 of these technology chips, and represent about 35% of the vehicle cost; without them our vehicles simply cannot be made.
The shortage is so significant that some manufacturing plants have been forced to close. As a result, the backlog of new vehicles means that second-hand vehicles are more expensive.
Conflicts in the country have directly impacted availability and delivery times of a variety of vehicle components. For example, BMW, Audi and Volkswagen have manufacturing resource in Ukraine for harnesses that hold vehicle cabling together. While they’re inexpensive, they are bespoke to each model.
Car plants have closed across Europe, as production can’t begin without these bespoke harnesses.
The HSE has said that the number of employees in motor has been in decline in the last few years. Brexit has accelerated this decline as overseas employees leave the nation. Finally, the cost of transport has also increased which has had a knock-on effect on inflation.
The Institute of the Motor Industry (IMI) is predicting that 160,000 vacancies in the sector will need to be filled by 20311.
The introduction of new and innovative technology in electric vehicles has resulted in an unprecedented increase in car part theft, specifically lithium batteries, which are more expensive to replace or repair due to a lack of specialists in the industry (Only 6.5% of the current motor workforce is qualified to service EVs2). It also costs a great deal more to dispose of lithium batteries, which inevitably increases premiums.
Specialist Risk Insurance Solutions (SRIS) Claims Director – Motor, Jamie George, comments:
“The SRIS Motor Claims Team works tirelessly to assist our customers throughout the entirety of the claim journey, from Day One with Own Damage or Third-Party Capture, to minimise and mitigate costs on all heads of claim. The teamwork with the customer to always protect their interests and have their best intentions in mind.”
SRIS Client Relationship Director – Motor, Robert Wright, comments “Early reporting is a must, and it will allow us to help you. After any incident, policyholders and drivers must respond quickly to requests for information. Having the right reporting processes in place to provide us with meaningful information in a timely manner is vital as this will allow us to ensure liability is quickly established.”
Find out more about why claims inflation in relation to liability.
Sources:
1 https://tide.theimi.org.uk/industry-latest/news/imi-predicts-160000-shortfall-workers-uk-automotive-sector-next-decade
2 https://www.fleetnews.co.uk/news/latest-fleet-news/electric-fleet-news/2021/08/19/uk-needs-75-000-ev-ready-mechanics-warns-imi
What are the main reasons for claims inflation?
Over the last year, everyone has seen a rise in the ‘cost of living’ as the Consumer Price Index (CPI) continues to increase. There are several factors that have led to this consequence, with most industries affected.
Put simply, claims inflation is the change in the average price of goods and materials, and services in relation to a portfolio of representative claims.
Our Group claims specialists put together three of the main areas we believe might affect our clients the most. Below, you will be able to read through the reasons for claims inflation in Motor Fleet, Liability, and Property insurance and gain an understanding of how the current economic climate could affect you and your business.
With the average claim costing over £5,0001, it is no wonder people are asking ‘why?’. In this article, the team talks about the specific elements across supply chains, conflict between countries, and the impact of the global COVID-19 pandemic that has amounted to claims inflation for Motor policies.
From the global pandemic, and new regulations because of Brexit, to climate change, if you’re curious about some of the biggest reasons driving claims prices upwards in Property insurance read our latest article.
When the cost of repairs, materials, and labour rise, so does the cost of third-party liability for property damage. Inflation also raises the cost of settlements and damages awarded in court cases.
Specialist Risk Insurance Solutions (SRIS) Client Relationship Director – Motor, Robert Wright, comments “Early reporting is a must, and it will allow us to help you. After any incident, policyholders and drivers must respond quickly to requests for information. Having the right reporting processes in place to provide us with meaningful information in a timely manner is vital as this will allow us to ensure liability is quickly established.”
Sources:
If your business has never been the victim of a cyber-attack, it can be difficult to comprehend how vulnerable your business could be. However, as a specialist insurance broker, we are here to help you understand the digital risks your business is exposed to so that you can take the appropriate action.
We often hear from clients that they are unsure of the digital risk their business faces and therefore, we have outlined a couple below with advice from our expert team:
“We invest in IT security, so we don’t need Cyber insurance…”
“We don’t collect any sensitive data, so we don’t need Cyber insurance…”
“Cyber-attacks only affect big businesses. We’re too small to be a target…”
“Our other insurance policies cover Cyber risks…”
We are here to help
With extensive experience in the digital risk’s businesses are exposed to, we are well placed to support and protect your business.
For more information on how your business can benefit from Cyber insurance, get in touch with our specialist, Jason Cohen:
In 2018, testing autonomous vehicle technology did indeed pick up momentum. In Arizona, autonomous vehicle manufacturers and other stakeholders–including insurance companies–are now speeding up their road testing programmes, following a brief hiatus after the fatal self-driving Uber crash. They are driven by the introduction of rules, regulations and official law to makes roads safer. The UK leads the way in terms of legislation and codes of practice relating to autonomous vehicle operations. In July 2018, the UK Government adopted the Automated and Electric Vehicles Act 2018, laying down a regulatory framework that brings automated vehicle insurance into line with the long-standing practice of motor insurance.
The Act ensures that British drivers are covered both when they drive and when the driver legitimately gives the vehicle control. Legislative support was not so easily granted elsewhere. The US had to pass a bill that prevented individual states from blocking driverless car tests after some strict regulations citing public safety concerns. It can be argued that public confidence is exactly what autonomous vehicle technology currently lacks. This is mainly due to the large number of unanswered questions concerning issues such as safety (what criteria are used to define safety in the autonomous era?), liability (when something inevitably goes wrong, who is responsible?), accessibility (who can use a driverless car safely) and so on.
As autonomous vehicle technology continues to advance, and testing becomes more thorough, the insurance industry is really starting to engage. Not everyone can be an expert, but we take the time to learn about the risks. Hamilton Leigh, for example, keep up to date with the latest technological advances and the latest legal and regulatory decisions so that we can keep our clients informed as they continue to accelerate their interest in autonomous vehicle technology.