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The impact of the pandemic has been felt in many different ways. Some of the effects have been quite immediate, but now many businesses are starting to see how the events of the last year are affecting their annual business insurance rates as well.
Before COVID-19 struck, there were already a number of factors adversely impacting the insurance industry and the market has steadily deteriorated during the last year. Beyond the pandemic, the industry has also been affected by:
- Changes in legislation
- A sharp rise in UK property rates
- Flood and storm damage claims
- Rising reinsurance rates and reducing capacity
- Lower interest rates
The combined effect of these issues and COVID-19 has meant that many insurers are now looking to increase business insurance premiums in the year to come.
With many businesses already struggling with cost and cash flow management issues, a sudden increase in insurance rates could damage their ability to recover later in the year.
To combat some of the issues listed above, the insurance industry is reacting. One such area is specialist insurance for those in high flood risk areas, which uses a very practical approach.
If a business has previously been flooded, is at risk of flooding or has flood insurance in place, a new product has been created that is essentially a drain pipe attached to the outside of the premises.
When water levels reach a pre-agreed height on the drainpipe, the insurance policy pays out a pre-agreed sum of money immediately.
This new type of policy is not based on damage costs, like a traditional policy, and can be used as flood insurance or as cover for the excess on existing flood insurance.
This is one of several new insurance products on the market designed to reduce premiums, which is why businesses need to assess their current level of cover and the costs involved.