Brighter times ahead for business interruption insurance as demand grows

Date: Monday, January 16th, 2023 by Michaela Hickson.

New GILC report highlights international variations in response to business interruption insurance as demand grows but insurers become increasingly wary

Global Insurance Law Connect (GILC) has launched its first ‘Business Interruption Report’, providing insights from 19 countries on business interruption insurance in their domestic markets. The report provides details on the key changes to the global business interruption market and provides a predicted outlook for coming years. The report finds that following the pandemic and despite the backdrop of high inflation, increased scrutiny on wordings and higher premia, there is now more clarity for both businesses and insurers around what can be expected from a business interruption policy.

 Gillian Davidson, GILC’s Chair and a Partner at Sparke Helmore, commented: “Business interruption insurance was thrust into the spotlight as the pandemic took hold and the world went into lockdown. The report highlights that even though businesses globally were facing similar challenges the response from the insurance industry, governments and regulators varied markedly in each jurisdiction. However, a consistent picture is  that globally demand for business interruption has increased as businesses have become focussed on the need to have the right type of cover.

“Despite some short-term pressures on pricing caused by global inflation, a recent wave of cases in Asia (including a potential new variant in China) and ongoing legal challenges hanging over from the pandemic, the outlook for business interruption insurance as a class is more positive than it has been for some years. The pandemic has focused the market on the need for clarity in policy drafting and has led to a proliferation of covid-responsive policies that either clearly exclude or include pandemic cover providing more certainty for insurers globally, and their clients.

“Consequently, business interruption insurance as a class could see a period of growth and stability at last (particularly in more traditional areas of coverage such as property damage). However, there will still be a need by some clients for pandemic cover (particularly if the recent resurgence of cases in Asia leads to renewed Covid measures and focus on such protection) and it remains to be seen what appetite insurers will have for such cover and at what cost.”

To download the report, visit www.globalinsurancelaw.com