Whilst it may take until the end of 2020 or even early 2021 for insurers to fully understand their pandemic exposures, insurers have already implemented remedial action to protect themselves. This comes in the form of COVID-19 exclusions to policy wordings as an absolute minimum. Some go as far as a complete communicable disease exclusion.
Aside from communicable disease exclusions, another trend we are seeing is most insurers’ reluctance to quote on new business. Whilst the market has generally reacted sensibly when addressing renewals, particularly where longstanding relationships have been built, many are currently focussed on their bottom line rather than top line. That being said, we are already seeing new insurers enter the Real Estate arena, which should help drive competition with established markets. Now more than ever, we are advising our clients to engage with us at least three months prior to renewal, in order to establish a clear strategy for both renewal and the longer term.
One area of the insurance market that appears to be bucking the wider trend is the transactional risks space. Warranty & Indemnity insurers are continuing to spring up, and often employing well established tax and Mergers & Acquisitions (M&A) lawyers as they see this as an area of continued growth. As a result, risks that were not insurable even twelve months ago are now being considered, and new products continue to be introduced. The message to our clients in this area is simple; if you have an identified risk during a transaction, whatever it is, talk to us about it.
Finally, it would be remiss of us not to mention claims. We continue to work proactively with our clients and insurers on some significant COVID-19 related exposures, whilst also watching with keen interest for the outcome of the FCA’s Business Interruption test case. It is common knowledge that there are an enormous number of outstanding claims notifications and actual claims in the market at present relating to COVID-19. Much will be decided upon the FCA case verdict. In the meantime, we are working with our customers to help formulate robust positions in the background, helping to push for a favourable outcome.
2020 will undoubtedly be one of the more turbulent years in living history for both the world and the insurance market. The London market, however, has been in existence for over 350 years due to its resilience and ability to adapt. We continue to have every confidence that it will come out of this year stronger and having learnt valuable lessons along the way.
Conditions and Limitations
This note is not intended to give legal or financial advice, and, accordingly, it should not be relied upon for such. It should not be regarded as a comprehensive statement of the law and/ or market practice in this area. In preparing this note we have relied on information sourced from third parties and we make no claims as to the completeness or accuracy of the information contained herein. It reflects our understanding as at 1 September 2020, but you will recognise that matters concerning COVID-19 are fast changing across the world.
You should not act upon information in this bulletin nor determine not to act, without first seeking specific legal and/or specialist advice. Our advice to our clients is as an insurance broker and is provided subject to specific terms and conditions, the terms of which take precedence over any representations in this document. No third party to whom this is passed can rely on it. We and our officers, employees or agents shall not be responsible for any loss whatsoever arising from the recipient’s reliance upon any information we provide herein and exclude liability for the content to fullest extent permitted by law. Should you require advice about your specific insurance arrangements or specific claim circumstances, please get in touch with your usual contact at Gallagher Construction.