Airmic 2013: Losing claims through innocent non-disclosure is the number one concern

The possibility that claims will not be paid because of innocent non-disclosure of information when buying a policy is the top concern of corporate insurance buyers, according to Airmic’s membership survey.

The association surveyed 129 members in May and found that claims-related issues, product innovation and global compliance are the main concerns.

It found that 52.6% cited ‘innocent non-disclosure of material information’ as being one of the five top worries.

One-third highlighted the closely related issue of ‘warranties and basis of contract clauses’ as a concern; this is followed by 42.1% citing ‘delayed insurance claim payments’; 30.7% ‘difficulties in handling large claims’; 27.2% ‘inappropriate use of reservation of rights’; and 23.7% ‘increase in the cost of handling claims’.

The results underpin Airmic’s priorities. It has been campaigning for changes to the disclosure requirements imposed on insurance buyers, and today unveiled a new model wording to negate basis clauses.

Other concerns that feature prominently are ‘lack of insurance product innovation’ (46.5%) and ‘multi-national insurance program compliance’ (39.3%).

Supply chain risk is also a prime concern for risk managers, but only a half of those who responded have bought cover in this area. The main reasons for not doing so were cost, unreasonable data requirements from insurers and the difficulty of establishing the cost of business interruption when making a claim.

In addition, cyber risk was identified as a top-five exposure concern by around three quarters of risk managers yet fewer than a quarter actually insure against it. The main reasons given were lack of adequate of coverage and high cost. 

Airmic chief executive John Hurrell said: “It is noteworthy that three of the four main exposures that worry our members are areas where they find it hard to buy worthwhile insurance. On the whole it is not the price that puts them off but the availability of what they believe to be adequate coverage. This would suggest that Insurers are missing an opportunity to do a lot of additional business with corporate UK.”