New report: commercial insurance market possibly in crisis

The new report recently issued by PwC and Mactavish has been praised by the Association of Insurance and Risk Managers for revealing the potential crisis approaching the commercial insurance market.

AIRMIC released a statement in conjunction with the new report stating that its long-held views in regards to the unsustainable and dangerous nature of business liability insurance have finally been vindicated by the PwC/Mactavish report’s evidentiary findings.   AIRMIC also stated that the report demonstrated that due to the highly customer-hostile nature of professional indemnity legislation, even good faith claims may run the risk of being refused by insurers.

Mid-market companies will find the situation especially threatening, said AIRMIC.  This is due to the fact that these companies do not have the financial resources larger players routinely have a their disposal and simply cannot employ insurance professionals in a full-time capacity.

AIRMIC announced that it was currently working on introducing a remedial clause to be used in commercial insurance contracts that would benefit both parties by providing greater clarity.  The organisation also declared it will be publishing a best practices guide as a further aid in the matter, especially as the new report highlighted just how urgent these projects are in light of how vital the commercial insurance role is in the current economic landscape.

AIRMIC was also welcoming to focus boards taking fresh looks at the importance of insurance to financial structures and what kinds of roles it can play.  Additionally it stressed the importance of using a risk-based approach to purchasing insurance cover.

Effective insurance policies could make the difference between failure and survival of a company in the face of a catastrophic loss, the association stated.  It concluded that unless it pays out, the cheapest policy available has no intrinsic value.

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