Commercial customers are being further educated on both weather-driven and escape of water claims, and the roles they can adopt in building resilience against these risks. Furthermore, we are seeing more remote technology being introduced to the market to alert business owners and insurers of water leaks, as and when they happen.
Yet, fire damage is still a property damage type which feels untapped when it comes to policyholder education and planning. Fire safety and building material regulations are frequently under review, but it arguably takes major fire claims to trigger these conversations and bring them to the forefront of the conversation. In 2018, we saw the devastation of high-profile heritage buildings such as the Glasgow School of Art and Primark in Belfast city centre (the historic Bank Buildings), and yet there remains a lack of urgency in some quarters to educate policyholders on the fire risks they face. For business owners the risks go beyond the physical damage, with business interruption financially crippling many unprepared for what can come. Jonathan Davison, strategic development director of the British Damage Management Association (BDMA), explores…
Business interruption insurance
Many business owners only realise they have made a mistake regarding business interruption insurance, or lack of, when it is too late. As an industry we need to do more to assist this. Insurers need to be explicitly clear with customers when they take out a commercial insurance policy and explain the benefits of adding such products to their policies so that they are rightfully protected. The mentality that ‘it won’t happen to us’ is still far too common. When of course, taking a fire incident as example, even a separate building could affect the business of a policyholder. We have seen this happen with tragic incidents such as Grenfell Tower.
Better education is also required for policyholders in relation to indemnity periods, as often when business interruption insurance is taken out, policyholders have not considered just how long their property could be affected for if they did experience damage. Fire damage is not a quick fix. From forensic investigation, to post-loss policy liability acceptance, through to the damage restoration process, you simply cannot put an accurate timeframe on it at the point of policy agreement. Therefore, risks need to be carefully analysed and advised by professionals, in order to give policyholders the best possible outcome following a claim.
Beyond the building damage following a fire, documents and sentimental items are also a devasting loss. While most businesses back up documentation digitally today, some smaller businesses that have been in operation long before technological advancements will likely have paper resources which are of importance. While data protection and security guidelines become ever stricter, we must demonstrate the importance of safely backing up documentation where possible. Businesses simply cannot afford to dismiss this advice.
The idea of this communication isn’t to scare off policyholders, but instead to be transparent and lay all options out on the table. Insurers can therefore reassure that specialist restoration is an option should fire damage occur to documentation and sentimental items. The claims process following property damage is a traumatic time of uncertainty for policyholders. Doing all we can to better this experience makes a huge difference to ease the woes and heartache of individuals, families and business owners. Not all policyholders are educated that specialist restoration can be achieved but providing this solution for their business sensitive documentation and (or) sentimental belongings, and certain items that cannot be replaced, can ease uncertainties. Assuring this is an option will demonstrate that insurers and others in the supply chain have policyholders’ best interests at heart.
Planning for the possible
Businesses need a proactive action plan established in case they are to encounter fire damage within their premises, or they are affected by a nearby location. While the emergency services will take the primary role in the response to a fire, the insurance supply chain can help to educate policyholders on the steps to take when making a claim and clearly define the process that their claim will go through. We can further explain each supplier’s role in the supply chain and under what circumstances the policyholder may engage with them. Insurers can also advise on all the information the policyholder should come forward with to make the claims process as simple as possible.
We could further motivate businesses to engage in proactive plans by creating digital templates for them to complete internally, with a checklist of considerations. Plans should always be updated when circumstances change too, for example if a business’ premises are undergoing refurbishment the elements of risk may change and considerations will need to be made.
We have certainly come a long way in the industry with enhancing claims experiences and treating customers fairly, but this next step of closer attention to education and fire risks would be a great move in 2019.
The above is an opinion piece written by Jonathan Davison (pictured) of the British Damage Management Association (BDMA). The views expressed within the article are not necessarily those of Insurance Business.