Engaging with business to get business interruption insurance right

23rd May 2018

In 2015 the British Insurance Brokers’ Association (BIBA) created guides for brokers and their customers to address the issue of under-insurance in respect of commercial insurance.  The resultant industry discussion highlighted particular issues with assessing correct levels of cover for business interruption insurance (BI), one of the most complex areas of insurance for any firm.

A survey by the Chartered Institute of Loss Adjusters (CILA) found that one of the biggest issues causing BI under-insurance was around the failure to include wages in the gross profit calculation and the lack of annual declarations.  Malcolm Hyde, Executive Director at CILA said: “Declaration policies provide the opportunity to get this right. An appropriately worded calculation declaration could go a long way to avoiding this under-insurance.”

Taking this on board, BIBA in conjunction with its Property Committee and Insurance Brokers’ Standards Committee, has today launched a standard BI Declaration Template to be used across the market to help reduce under-insurance. The template sets out clearly, with guidance notes, which figures need to be declared, in relation to what period and how these feed into the BI sum insured.

BIBA Executive Director, Graeme Trudgill said:  “It is vitally important that businesses have the right level of cover in place on their BI insurance to enable them to get back to the trading position they enjoyed before a claim.  Ensuring that clients submit declarations and that the figures used in the calculation of the sum insured are accurate is of great value in setting the right level of cover.  Promoting the use of a standard form of declaration that needs to be submitted each year will definitely help negate this issue.”

The BI Declaration Template is available to BIBA members online at www.biba.org.uk

BIBA Technical Services Manager, Martin Bridges concluded: “We engaged with insurers and brokers to create the template and this collaboration will aid customers and help brokers to maintain excellent professional standards.”


Notes to editors

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The British Insurance Brokers’ Association (BIBA) is the UK’s leading general insurance intermediary organisation representing the interests of insurance brokers, intermediaries and their customers.

BIBA membership includes just under 2,000 regulated firms, employing more than 100,000 staff.  General insurance brokers contribute 1% of GDP to the UK economy; they arrange 72% of all general insurance with a premium totaling £62.7bn and 93% of all commercial insurance business. Insurance brokers put their customers’ interests first, providing advice, access to suitable insurance protection and risk management.

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