Source:
AIRMIC (England)
Business leaders must stop seeing insurance as a grudge purchase and start using it to enable them to take risks as they grow their business, the IoD and Airmic have said today. In conjunction with Airmic, the IoD has produced a new guide for company directors, urging boards to view insurance not just as a necessary precaution, but as a way to help them launch into new markets and expand their business.
AIRMIC (England)
Business leaders must stop seeing insurance as a grudge purchase and start using it to enable them to take risks as they grow their business, the IoD and Airmic have said today. In conjunction with Airmic, the IoD has produced a new guide for company directors, urging boards to view insurance not just as a necessary precaution, but as a way to help them launch into new markets and expand their business.
“For some directors, insurance may traditionally have been a ‘grudge purchase’ – something they felt obliged to spend money on, but did so reluctantly, at the lowest possible price and with little understanding of the cover acquired. If so, the dynamic nature of today’s business environment demands a new approach,” said Simon Walker, director-general at the Institute of Directors.
“The right business insurance acts as a strategic enabler, underpinning companies’ ambitions and allowing them to seize new opportunities. The size and complexity of insurance contracts alone means they demand board-level scrutiny to ensure that cover is ‘fit for purpose’ and that it also represents good value.”
The new report, Critical Business Insurance, identifies four reasons that boards should take an active interest in their insurance programmes:
•The modern risk environment is constantly changing and becoming more diverse, with the emergence of new and less tangible threats such as cyber and supply chain disruption
•Insurance policies are among the largest commercial contracts many companies enter into, and boards therefore have a duty to understand them
•The Insurance Act comes into force next August, providing greater protection for commercial policyholders, but also placing greater obligations on them
•Insurance can act as a strategic enabler, underpinning companies’ ambitions and allowing them to seize new opportunities.
John Hurrell, Airmic chief executive, stressed the importance of making sure businesses buy the right insurance policy. “All too often companies assume that policies will pay out when needed. While most policies do indeed pay out, such complacency can be costly," he explained. "When a large risk materialises that is uninsured, or where a claim against it is delayed, unpaid or only partially paid, the consequences can be disastrous.”
“The right business insurance acts as a strategic enabler, underpinning companies’ ambitions and allowing them to seize new opportunities. The size and complexity of insurance contracts alone means they demand board-level scrutiny to ensure that cover is ‘fit for purpose’ and that it also represents good value.”
The new report, Critical Business Insurance, identifies four reasons that boards should take an active interest in their insurance programmes:
•The modern risk environment is constantly changing and becoming more diverse, with the emergence of new and less tangible threats such as cyber and supply chain disruption
•Insurance policies are among the largest commercial contracts many companies enter into, and boards therefore have a duty to understand them
•The Insurance Act comes into force next August, providing greater protection for commercial policyholders, but also placing greater obligations on them
•Insurance can act as a strategic enabler, underpinning companies’ ambitions and allowing them to seize new opportunities.
John Hurrell, Airmic chief executive, stressed the importance of making sure businesses buy the right insurance policy. “All too often companies assume that policies will pay out when needed. While most policies do indeed pay out, such complacency can be costly," he explained. "When a large risk materialises that is uninsured, or where a claim against it is delayed, unpaid or only partially paid, the consequences can be disastrous.”