Increasing numbers of insurance customers risk having unfunded losses in their professional and personal lives as the cost of living crisis continues to hit Brits hard – this is a “concern”, according to Biba’s executive director, Graeme Trudgill.
As part of its 2023 manifesto – entitled Managing risk – Delivering stabilitypublished on 24 January 2023 – Biba asked 74 of its broker members between October and November 2022 about the issues arising for themselves and their clients because of the current cost of living crisis.
The manifesto stated that these research “statistics matter because they suggest a reduction in businesses’ resilience to unexpected incidents and losses”.
Biba urged that it is “important to understand that a lack of insurance serves to inhibit risk taking and innovation”, which in turn creates “a drag on growth”.
The survey found:
- Standalone cyber insurance – 40% of respondents said that previous insureds are no longer covering their cyber risks.
- Private car and motorcycle insurance – 42% of respondents reported that customers had removed an add-on cover.
- Home buildings and contents insurance – 38% of respondents’ customers have removed add-ons such as accidental damage, personal possessions and legal expenses.
- Shop and office insurance – 20% of respondents said customers had opted to reduce sums insured.
- Tradesman insurance – 22% of respondents said that clients had opted to remove a section of their cover and 15% had reduced limits of indemnity.
- Group personal accident and business travel – 32% of respondents’ customers were no longer insuring this risk.
Findings from Biba’s survey also found that 43% of respondents had seen a greater take up of premium finance installment options, while an additional 23% reported that their property owners’ insurance customers had increased their excesses in order to reduce premiums.
In response to the cost of living crisis “hitting families hard”, Adam Beckett, chief distribution officer at Ageas UK, said: “We’ve been working with data experts to understand the ways different segments of the population may be affected and how this might be reflected across customers and potential customers we engage with.
“To support those in need, we are building on our vulnerable customer program and upskilling our customer-facing people with tailored training to even better support those who find themselves in extremely vulnerable situations.”
In terms of how the current financial recession has impacted businesses’ buying behaviours, research by premium finance provider Premium Credit that was cited in Biba’s manifesto, which surveyed 681 SME owners and managers, found that:
- Over half (51%) of businesses have stopped buying at least one insurance cover in the past year.
- Around 26% of SMEs have stopped buying compulsory employers’ liability insurance.
- Approximately 22% of surveyed firms have stopped buying professional indemnity insurance.
- Around 21% of respondents have stopped buying public liability insurance.
- Approximately 19% of SMEs have stopped buying business interruption insurance.
Nick Hobbs, chief distribution and regions officer at Allianz Insurance, said: “This topic resonates with us. Our own 2022 survey of SMEs has revealed practices that would leave businesses without sufficient cover in the event of a relevant loss. We are delighted to have launched the new underinsurance guide with Biba.”
Biba and insurer Allianz published its digital underinsurance guide in May 2022.
Last year, Biba also worked with specialist loss adjuster QuestGates to create a guide around valuations for the trade association’s members. Published in September 2022, this document also aimed to tackle underinsurance.