Understand your insurance cover, Airmic CEO urges business leaders

Many senior business executives do not spend enough time reviewing their insurance programmes and as a result believe they have cover where they do not, according to Airmic CEO John Hurrell.

Writing in The Future of Insurance, a report by Business Reporter in partnership with The Telegraph, Hurrell warned that, while most insurance policies do pay out as and when expected, it is by no means certain and complacency in this arena can be devastating for business.

"Some insurance policies are potentially worth hundreds of millions of pounds. If, in the event of an incident, the claim is either refused or delayed, it can seriously dent a company's profits, cash flow and even potentially undermine the financial viability of the business," he wrote.

Following on from Airmic's work on "business-critical insurance", Hurrell urged senior executives to take more consideration of their cover: "If the insurance is designed to cover against events that could lead to significant balance sheet damage - then it needs to be on the boardroom agenda. Executives need to have at least enough knowledge to ask the right questions of their insurance specialist."

In the article, Hurrell said that boards need to ask, first, how well their insurance programmes fit with their risk map, and second, how effective the insurance policies will be in the event of claim. He noted: "Most loss adjusters agree that over 80% of refused claims could be avoided if the policy had been written correctly in the first place. This is entirely preventable by spending the time to tailor policies to fit with the precise nature of the business."