LONDON, 16 December 2008 — UK companies face new insurance claim burdens in 2009 with fraud on the increase and spiralling legal fees. New environmental threats, terrorism and product recalls will also shape the insurance claims landscape, according to the UK’s leading broker Aon. These will test the adequacy of policy coverage and the willingness of insurers to pay claims for the emerging and potentially costly issues.
Aon is warning companies to brace themselves for the top claims hotspots:
- higher claims costs due to legal fees, credit hire and referral fees driving premium increases
- increased fraud as the recession takes hold, leading to delayed claims settlements and greater bureaucracy
- new sources of liability from unexpected exposures such as emerging and unproven technologies including nano-technology, more product contamination issues and liabilities from financial derivatives
- more extensive environmental pollution claims as environmental awareness increases and with the implementation of the Environmental Liability Directive
- terrorist/piracy attacks affecting commerce worldwide and possibly stifling trade.
John Bell, head of claims for Aon’s commercial insurance team, commented: “2008 was characterised by the rapid onset of a major global recession and the impact is spreading in terms of claims trends in 2009. There is a growing possibility that any financial loss may be pursued against directors who are considered to be at fault and individuals are less well off so may be tempted to make fraudulent claims. However, this comes at a time when insurers are less inclined to take a sympathetic view to paying even legitimate claims.
“The increased costs of resource needed to respond to more claims, plus the cost of payments, will be transferred back to businesses through increased premiums. Companies need to keep risk awareness at the top of their agenda so brokers can show insurers that their clients have identified risks and have plans in place to reduce or manage them. This means insurers will be more likely to respond positively in terms of pricing.
“Companies need to garner independent claims advice to make sure that valid claims are paid swiftly. Struggling businesses should not have claims delayed by insurers switching to investigate every claim as fraudulent and introducing added complications to this crucial process.”
Aon Corporation (NYSE: AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, and human capital consulting. Through its more than 36,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was named the world’s best broker by Euromoney magazine’s 2008 Insurance Survey. In 2008, Aon ranked highest on the Business Insurance ranking of the world’s largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues. Aon also was ranked by A.M. Best as the number one insurance broker based on brokerage revenues in 2007 and 2008, and was voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 and 2008 by the readers of Business Insurance. www.aon.com/.Tags: Aon, claims, emerging risks