Anyone who bets on a boring start to 2021 will be deeply disappointed with the first five weeks of the new year. Between the storming of the United States Capitol and the takeover of Wall Street by private investors, 2021 shows no indication that it should be any less turbulent than last year.
The insurance industry faces its own tipping point in 2021 following the Supreme Court ruling on the FCA business interruption insurance test case. Since the ruling, which was hailed as a strong win for policyholders (albeit with some caveats), the industry has moved seamlessly from “what will happen?” To “what will happen next?”. In a comment to ruling BIBA CEO Steve White it was highlighted that it is now necessary for insurers to act quickly, handle their claims fairly and ensure clear communication with brokers.
Read more: QIC Action Group discusses its response to the Supreme Court ruling
For insurance brokers, the next steps are crucial. Policyholders with an applicable claim will check for continuous updates to any payment plans organized by insurers. For many across the UK, validating their business interruption entitlement was a pivotal moment for their businesses. And after they have been held in suspense for several months, it is of the utmost importance to keep up to date with the status of their claim.
Over the past year, insurers have had to introduce new digital communication tools and ensure that these channels are not only accessible to customers but also suit their preferences. Good brokers have the perfect mix of platforms that have been set up by now and can make best use of these channels to keep their clients informed of relevant updates as they become available.
Read more: Fenchurch Act on What Happens Next After Supreme Court Ruling on Business Interruption
The next few weeks will be crucial as brokers refer their SMB customers to the Policy Checker provided by the FCA to determine if their COVID-19 related BI losses are likely to be covered. Other key steps include drafting the Supreme Court ruling into a series of statements and the FCA’s publication of a guide for brokers and policyholder representatives to determine how various wordings will respond in the light of the ruling.
Few would deny that the aftershocks from this fall are likely to be felt by the insurance industry for many years to come. There is already debate across the industry as to the long-term impact the ruling will have on policy formulation, reporting and the reputation of the industry. For insurance brokers, each of these factors has a final impact not only on the services they offer to their clients, but also on the valuation of those services.
Brokers will be forced to deal with adjustments to the guideline wording or reporting on an individual basis and to communicate the resulting changes to the affected customers effectively and efficiently. However, the reputation impact of the ruling is an industry-wide problem. Senior figures from a number of insurance organizations, from the Chartered Insurance Institute (CII) to the London FOIL, have looked at the current state of the insurance industry and brokers should carefully consider the concerns of these findings.
2021 is undoubtedly a year of real opportunities for brokers to find new product lines, win new business, and take advantage of the changing insurance market – but conversations about such opportunities require a solid foundation of trust. That trust is the most important part of the value proposition that brokers bring to the insurance ecosystem, and without it all brokers can do whatever it takes to retain their current clients, let alone start new growth avenues.
Brokers should use the verdict as an opportunity to prove that they put customers at the heart of their business and are willing to go the extra mile to offer bespoke value-added service. The only question left for brokers is: are you up to this challenge?