We may finally be emerging from the pandemic but life will not necessarily be rosy for every business.
I have been amazed at the resilience of the majority of our clients, with some actually thriving, but remember all too well the ‘fallout’ as we emerged from the last major recession in 2010.
Back then many companies managed to just about pull through the actual recession but trading in the ‘recovery’ was still tough and many, their reserves depleted and with little bank lending available, finally succumbed and sold up.
This time, firms who only survived because of the Government’s furlough scheme, will still be operating at reduced turnover as they face the prospect of paying back Government loans, the end of various tax breaks and now, higher taxes. Many will be in survival mode for some time and understandably look to cut costs, including insurance premiums, but a word of caution – when money is tight the last thing you need is an unexpected and uninsured burden on your cashflow.
Opting not to insure certain risks considered too remote in relation to the premium, or if they happened, would not be too onerous is fine when there is spare cash to deal with the unexpected. However, when times are hard a one off event or series of smaller uninsured incidents can send a business over the edge and if anything, is a time to ensure that your business is as fully protected as possible.
But enough negativity – many companies are well positioned to take advantage of new opportunities as we emerge from the pandemic and the drive to ‘net zero’. That may involve new products or services or significant changes to your business operations, and if so, make sure you tell your insurers. You have an obligation to give them a ‘fair presentation of risk’ to ensure you are covered.
Also, changes to your business may involve new risks and possibly the need for different insurance. The increased cyber risk of staff working from home is fairly obvious, but here are a few others. If you start to offer design or consultancy services, you should consider Professional Indemnity insurance. If you extend lines of credit to new customers consider Credit Insurance.
Outsourcing, joint ventures or the hire of equipment or services may involve contractual responsibilities and require a different type of insurance or the adaptation of existing policies to note the interests of the various parties involved.
Supply chains have or are changing with less reliance on ‘just in time’ and may now require additional storage, possibly involving higher stock levels or new locations. Checking the responsibility for cover when importing is a must and frequently taking contingency cover rather than relying on a seller’s overseas insurer is a good option.
The most important thing is to keep risks and insurance protection under review. Insurers may have not had a great pandemic given their dreadful PR over the lack of COVID Business Interruption cover but other than for large corporates, insurance remains the only way of mitigating many of the risks involved in running a business.