Introduction
Thank you for taking the time to participate in this survey. For those who have not been involved before, the average of the last three surveys (the most recent in 2012) suggested that some 43% of business interruption policies have declared amounts that are too low.
Where there is an inadequacy, this tends to be significant – on average inadequately declared policies are only around half of the amount that they should be.
This is summarised in the 2012 report (BI Policy Wordings – Challenges Highlighted by Claims Experience) on page 21, where the market impact is quantified.
In extreme cases this might mean that the risks that Insurers have accepted are different in reality to those implied by the sums insured and such policies might be voidable.
Whether that will change under the Insurance Act 2015, is likely to depend on the basis of declaration clause, and we have added a question about that in this survey.
Nobody wants to be in a position where this is even a possibility. Insurers do not want to have to consider these issues – it is better for an appropriate premium to have been received and for issues of policy liability to not be complicated by things that can be avoided. For the policyholder, anything that might delay a liability decision (or worse) is not welcome. Nobody wants surprises.
This survey again attempts to identify the degree of under declaration and to establish some of the reasons why under insurance might arise. This survey should not take long to fill in. There is an opportunity to add narrative comments if there are issues that occur to you that are not the subject of questions and we would welcome any feedback. The collated results will be made available on the CILA website next year and will be disseminated as widely as possible with a view to trying to identify anything that can be done differently to reduce what might be an avoidable problem.