Don’t compromise protection as recession fears grow

With the predicted stagnation of the UK economy and a potential recession looming, Neil McGuire, head of commercial insurance at Lycetts, provides insight into how businesses can proactively shield themselves against financial risks.

As experts warn of challenges such as high interest rates, geopolitical uncertainties and trade restrictions, it is crucial that businesses address a number of key considerations:

Fair presentation of risks: In the aftermath of events like the Grenfell fire, there is increased need for businesses to provide comprehensive details about their properties. Generic terms like ‘standard construction’ are no longer sufficient. Instead, detailed information, from roof materials to structural components, is essential for ensuring adequate coverage and timely claims.

Future-proof insurance policies: Businesses evolve, which is why it is important for owners to align their insurance policies with future plans. Adaptability is key, and understanding how the business might evolve in the next 12 to 36 months is crucial for ensuring ongoing coverage is adequate.

Holistic risk management: Robust health and safety policies, thorough risk assessments, planned maintenance, and business continuity planning must be in place. Identifying critical machinery, having disaster recovery plans, and determining indemnity periods are vital components of effective risk management.

Cybersecurity and specialised protections: To strengthen defences against potential threats, Management Liability Protection (MLP), and coverage against weather-related incidents and electrical fires must be considered. Cyber-attacks are an increasing menace with a reported 6,500-plus cybercrimes occurring in the UK every day, at an average cost of £15,300 per incident. Small businesses are particularly vulnerable, and the recently launched Lycetts Cyber Safety Tool can assist time-constrained company owners in understanding their cyber vulnerabilities and implementing effective protective measures

Avoid common mistakes: Typical pitfalls include using the market value of the property instead of the value to fully reinstate the property, miscalculating the gross profit figure and setting an indemnity period under the business interruption insurance which is inadequate to provide enough time for the business to return to its previous trading level after a loss.

It is also crucial not to forget to declare payments made to labour-only subtractors and Bona Fide subcontractors under your Liability cover.

Seek expert advice: Lycetts can advise on commercial insurance cover to help you weather economic uncertainties and navigate your way through these turbulent times to long-term prosperity. Please contact us and one of the team will be happy to help you.