New suggestions made for BI policy wordings in insurance book

The Chartered Institute of Loss Adjusters (CILA) and the Insurance Institute of London (IIL) have published the 2024 edition of the business interruption (BI) insurance book.

The new edition, entitled BI Policy Wordings: Challenges highlighted by claims experience, suggests updates and clarifications to policy wordings.

This includes cessation of the term gross profit and addressing the commercial tension in encouraging mitigation, while retaining a retrospective economic test.

Aruna Chandrapalan, chair of CILA’s business interruption special interest group, said: “This report addresses topics identified by the BI community and CILA, highlighting those areas where we think some clarification would help customers, insurers and adjusters.”

Clarity

The book incorporates feedback from a range of stakeholders, including CILA members, insurers and brokers.

The guidance aims to enhance clarity and efficacy in BI insurance coverage.

Damian Glynn, previous chair of CILA’s business interruption special interest group, said that contract certainty “is more important than ever given the introduction of the FCA’s Consumer Duty in the UK last July”.

This requires firms to review their products and services against a new standard of fairness.

”We were concerned that there might be a presumption that anything pre-dating the pandemic on the world of BI was historic and not of current concern,” Glynn said.

”So, our primary motive in issuing this update was to avoid that perception and to apply minor tweaks such as updating newer survey data.”