37% of insurance professionals believe there is a 'high risk' of company directors being sued over poor preparations for a bad Brexit

New research(1) among insurance professionals reveals that more than a third (37%) believe there is a high risk of company directors being sued by investors and other stakeholders for not preparing for a bad Brexit properly. A further 19% think there is a ‘slight’ chance of this happening.

The research, which was conducted by Premium Credit, the UK’s leading premium finance company, found that four out of ten (38%) insurance professionals believe that a bad Brexit will lead to more businesses making insurance claims due, for example, to a higher level of business interruption risks. Some 15% think there will be a significant increase in businesses doing this.

When it comes to commercial risks and potential claims insurance professionals are most concerned about in relation to a poor Brexit, 38% cited Directors & Officers cover, followed by 31% who said business interruption risks/insurance claims.

For those directors and companies looking to their insurance to cover them for any problems caused by a bad Brexit, there is a chance their claims will be rejected. Only 21% of respondents believe companies have done a good job in keeping their insurers up to date in terms of informing them of the specific risks a bad Brexit poses to their operations.

Almost half (42%) believe this means there is a risk of commercial insurance claims linked to Brexit being rejected.

Adam Morghem, Strategy and Marketing Director at Premium Credit said: “Our findings are alarming but there is still time for many businesses to ensure they have appropriate plans in place for a bad Brexit and that they have provided their insurers with the relevant information to ensure that they have sufficient cover here."

“We are already seeing many companies reconsidering their cash flow and are choosing to pay for their insurance over instalments through for example premium finance, as opposed to paying in one go."

“If companies suffer from a bad Brexit and their insurance doesn’t pay out, or only partially meets their claim, companies will face further cash flow issues and be more reliant on our services.”

Premium Credit is the market leader in the UK and Ireland and the only premium finance provider accredited by BIBA.

Notes:

(1) 53 insurance brokers were interviewed by the research company PollRight in January and February 2019.