Many UK risk managers are not properly prepared for a major incident insurance claim
- Published: Tuesday, 12 September 2017 09:04
A survey carried out by Echelon Claims Consultants has revealed that many UK risk managers are not well prepared for an insurance claim arising as a result of a major incident.
The survey was carried out amongst risk managers of UK businesses. Of the risk managers that took part in the survey, 65 percent said that they had prepared a claims plan in case their business suffered a major loss, however only 41 percent had carried out any form of loss scenario planning to test these plans against realistic scenarios and confirm their insurance coverages would respond as expected.
Additionally, only a third of the risk managers said they had taken out insurance for any costs incurred as a result of compiling and presenting an insurance claim.
Incidents, such as natural catastrophes, manmade losses, social or political unrest and upheaval, create major challenges for businesses – especially those operating on an international scale. The subsequent insurance claims made as a result of damage to property, supply chain disruption, and breakdowns in the manufacturing process can be complex and time-consuming, with businesses often failing to fully appreciate the practical application of their insurances to the loss situation as well as underestimating the resources needed to settle the claim.
Candy Holland, managing director of Echelon, said, “Companies that get caught up in major incidents are often shocked by the magnitude of the losses, and then the sheer complexity of the insurance claims process that follows. Many companies underestimate the resources needed to deal with claims, and this can lead to costly delays and, potentially, shortfalls in the claim settlement.
“It’s encouraging to see that the majority of risk managers have carried out some form of planning for a major incident, but it concerns me that nearly two thirds haven’t actually stress tested these plans. Carrying out a loss scenario exercise is a good way to challenge any existing plans, as well as engage with insurers at an early stage to ensure they have the correct cover in place for the needs of their business.”