Anyone placing bets on a dull start to 2021 will have been sorely disappointed by the first five weeks of the New Year. Between the storming of the United States Capitol and retail investors taking on Wall Street, 2021 is showing no indication that it intends to be any less turbulent than the year that just passed.
The insurance industry has been faced with its own watershed moment in 2021 after the Supreme Court’s ruling on the FCA’s business interruption insurance test case. Since the ruling, which has been hailed as a strong win for policyholders (albeit with certain caveats), the industry has moved seamlessly from asking ‘what will happen?’ to ‘what will happen next?’. Commenting on the ruling BIBA’s CEO Steve White highlighted that what is needed now is for insurers to act quickly, to settle claims fairly, and to guarantee clear communication with brokers.
For insurance brokers, the next steps are instrumental. Policyholders with an applicable claim will be looking for continual updates on any payment schedule organised by insurers. For many throughout the UK, the validation of their business interruption claim has been a make-or-break moment for their businesses. And, having been held in suspense for several months, being kept up to date on the status of their claim is of the utmost importance.
Over the last year, insurance providers have had to embrace new digital means of communication and ensure that these channels are not just accessible to clients but also in line with their preferences. Good brokers will have the perfect blend of platforms established by now and will be best placed to utilise these channels to let their clients know of any relevant updates as and when they become available.
The next several weeks will be key as brokers refer their SME clients to the policy checker provided by the FCA to see if their COVID-19 related BI losses are likely covered. Other instrumental steps include the distilling of the Supreme Court’s judgement into a set of declarations and the FCA’s publication of a Q&A guide for brokers and policyholder representatives to establish how various wordings will respond given the ruling.
Few would deny that the aftershocks of this case will likely be felt by the insurance sector for many years to come. Across the industry, discussions are already taking place as to what long-term ramifications the ruling will have on policy wordings, on coverage and on the industry’s reputation. For insurance brokers, each of these factors will have a definitive knock-on effect, not just on the services they offer to their clients but also on how these services are valued.
Brokers will be forced to grapple with adjustments to policy wordings or coverage on an individual basis and to impart any resulting changes effectively and efficiently to their impacted clients, but the reputational impact of the ruling represents an industry-wide concern. Senior figures from a range of insurance organisations from the Chartered Insurance Institute (CII) to London FOIL have addressed where the reputation of the insurance industry stands at this time and brokers would do well to pay close mind to the concerning nature of these findings.
2021 is undoubtedly a year that offers real opportunities for brokers to find new product lines, to win new business and to embrace the changing insurance market - but conversations surrounding such opportunities work on the premise of a solid foundation of trust. This trust is the most essential component of the value proposition that brokers bring to the insurance ecosystem and, without it, it will be all brokers can do to retain their current clients let alone pursue new growth avenues.
Brokers should embrace the ruling as a chance to prove that they put clients at the very heart of their business and that they are willing to go the extra mile to provide a bespoke, value-add service. The only question left for brokers now is – are you up to that challenge?
