Business Interruption policy has reached new heights of need for businesses world-wide in a manner not recorded up until recently and with the high demand has come clarity of policy, setting the swing of cover.
The current dimension is that business interruption has become the cynosure of businesses and continuity and now, its in the spotlight. Events surrounding the policy during the pandemic has generated great concern for businesses and insurers and therefore, the need finer focus on the policy.
There is therefore greater clarity for businesses and insurers around on what can be expected from a business interruption policy and has resulted in a growing demand for cover globally.
This is the conclusion drawn by Global Insurance Law Connect, whose inaugural Business Interruption Report finds that, as a result of the pandemic, and despite the backdrop of high inflation, increased scrutiny on wordings and higher premia, the outlook for this class of cover is more positive than it has been for years.
Gillian Davidson (pictured), GILC’s chair and a partner at Sparke Helmore, commented: “Business interruption insurance was thrust into the spotlight as the pandemic took hold and the world went into lockdown. The report highlights that even though businesses globally were facing similar challenges the response from the insurance industry, governments and regulators varied markedly in each jurisdiction. However, a consistent picture is that globally demand for business interruption has increased as businesses have become focused on the need to have the right type of cover.
“Despite some short-term pressures on pricing caused by global inflation, a recent wave of cases in Asia (including a potential new variant in China) and ongoing legal challenges hanging over from the pandemic, the outlook for business interruption insurance as a class is more positive than it has been for some years. The pandemic has focused the market on the need for clarity in policy drafting and has led to a proliferation of Covid-responsive policies that either clearly exclude or include pandemic cover providing more certainty for insurers globally, and their clients.”
Davidson believes that BI could at last see a period of growth and stability – particularly in more traditional areas such as property damage.
There will still be a need for pandemic cover, Davidson adds, and it remains to be seen what appetite insurers will have for such cover and at what cost.
