Aon Highlights ‘Emerging Risks’ for UK Businesses

Aon has issued a warning from its London office to UK companies, which indicates that they may “face new insurance claim burdens in 2009 with fraud on the increase and spiraling legal fees.”

Aon also said that, “new environmental threats, terrorism and product recalls will also shape the insurance claims landscape. These will test the adequacy of policy coverage and the willingness of insurers to pay claims for the emerging and potentially costly issues.”

Aon selected five areas that companies should “brace themselves for the top claims hotspots,” which it listed as follows:
1. Higher claims costs due to legal fees, credit hire and referral fees
driving premium increases;
2. increased fraud as the recession takes hold, leading to delayed claims settlements and greater bureaucracy;
3. 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;
4. more extensive environmental pollution claims as environmental awareness increases and with the implementation of the Environmental Liability Directive, and
5. terrorist/piracy attacks affecting commerce worldwide and possibly
stifling trade.

John Bell, head of claims for Aon’s commercial insurance team, commented: “2008 was characterized 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.”

Source: Aon – www.aon.com