Commercial clients want wide coverage without the price tag, while insurers are trying to recoup returns, says broker director

Commercial clients are “more responsive” to exploring broader coverage options and looking in more detail at policy wordings following the dispute surrounding business interruption (BI) insurance claims linked to the Covid-19 pandemic, said Ian McCarron, director and co-founder of commercial wheels broker McCarron Coates.

Speaking exclusively to Insurance Times, McCarron explained that the FCA’s test case – which has now gone through the High Court and Supreme Court – has “obviously encouraged us to look a little bit closer into the structure of the programme and potentially where we might not have offered a BI extension, or we might not have pushed a BI extension as hard”.

However, “if we had said to a client ‘do you want to take out a notifiable disease extension’ previously, they probably wouldn’t have listened to us,” he added.

Moving forward, McCarron said that clients are “looking at the primary covers, but actually clients are probably a bit more responsive to looking at things in a bit more detail, putting wider cover in place. But at the same time, it comes at a cost”.

Fellow director and co-founder Paul Coates added: “In the current market, clients obviously want as much cover as they can [get], but they want it as cheap as they can [get] because of what’s going on in the world.

“We’re seeing clients who are trying to push insurers to provide as much cover as possible, but the clients are not willing to pay for additional cover in many circumstances and insurance companies are in the same boat, they’re not getting the returns that they need.”

Luckily, McCarron Coates has “hardly been affected by the whole BI piece”, McCarron admitted.

“If [clients’] vehicles go up in flames, the motor insurer pays out for them to be reinstated and the business continues trading, so it’s not like we’ve got a manufacturing plant that stops,” he said.

“Our vehicles are out there on the roads, so BI is not the primary exposure for the client. It’s actually that road risk. So, we’ve not had any of our clients having to challenge the decision of insurers or anything like that.”