For most businesses in the UK, there is a legal requirement to procure Employers Liability insurance covering costs arising from your legal liability to the employees who may become injured/ill at work.

If the business owns or leases vehicles, it is compulsory under the Road Traffic Act to have at least Third Party motor insurance, albeit it most circumstances Comprehensive coverage will be chosen.

Whilst not usually a legal requirement, most businesses will also acquire Public/Products Liability to protect against legal liability claims from injury or damage to third parties as a result of the business’ negligence.

Property Damage and Business Interruption is also usually considered as a core coverage, protecting the physical assets from perils such as theft, fire, flood etc.

The industry sector may also require Professional Indemnity insurance, covering the costs of third-party financial loss claims arising from professional services undertaken by the business.

Premiums vary depending on several factors, such as your trade activity, turnover, wage roll, reinstatement/replacement cost of assets. Underwriters will also consider your claims history, and business practices and processes such as risk management, contractual terms and conditions etc.

We would recommend you engage with your insurance broker to test your policies with the wider insurance market on a rolling three to five year basis to ensure your premiums remain competitive and policy coverage relevant.

You should also be aware that Insurance Premium Tax is usually added to premiums, with the prevailing rate being 12%.

The insurance protection for your international exposure can be dealt with in several ways:

– Multinational Programme, led from the UK
– Individual programmes in each territory, organised by a local Broker
– Fronting by local insurers

In practice it is usually a mix of the above that produces the correct result for your international business activities, and adherence to local compliance regulation.
We would recommend reviewing our Multinational Business page for further details.

Aggregating experience from our client base, industry partners and insurers, we see the following risk concerns of buyers:

– Cyber Attack and the rise of Artificial Intelligence (AI)
– Impact of climate change for Property Damage events
– Professional services mistakes
– Geopolitical instability
– Intangible assets – human capital, reputation/brand, and Intellectual Property (IP)

Insurance is often available to mitigate the impact of these risks but requires a clear understanding of the business’ concern and exposure to ensure that the offered policy matches the risk.

The impact of inflation on building materials and professional fees has meant that businesses should regularly review their asset values to ensure they meet insurer’s requirement of using reinstatement valuations as your sums insured. This is key to avoid the application of the Policy condition of average, which is a mechanism where Insurers can proportionately reduce claims payments if the sums insured used is incorrect.

The decision on policy indemnity limits, such as Employers Liability, Public Liability and Professional Indemnity will be driven by:

– The profile of the business
– Potential claim exposures
– Previous incidents whether insured or not and action taken to prevent reoccurrence in terms of policies and procedures
– Availability of cover and budgetary constraints
– Benchmarking against other organisations with a similar profile
– Contractual requirements

A broker will be able to offer assistance in setting these limits often by undertaking a peer comparison and contract reviews.