Exclusive: Businesses that stockpile goods in preparation for potential Brexit-related disruptions are leaving themselves at risk of being underinsured, brokers have warned.
Uncertainty about what will happen when the UK leaves the EU in March means large firms as well as SME businesses are stocking extra resources. Although a withdrawal agreement was approved in Brussels yesterday, there is no guarantee the deal will be approved by parliament in a vote penciled-in for 12 December.
Graeme Trudgill, executive director for the British Insurance Brokers’ Association, told Post: “We’re trying to raise awareness that anyone stockpiling for Brexit – which we’ve heard about a lot on our regional tour – needs to disclose that to their insurance broker. It’s a conversation that some brokers have said they are having with customers because of this Brexit effect.”
Last week it emerged that retailer, Majestic Wine, was stocking up to an extra £8m-worth of wine in its UK warehouses as a contingency against a no-deal Brexit. There have also been reports of increased demand for cold-storage space in food warehouses.
Trudgill added: “It’s really important that it’s disclosed to their broker, so the broker can make the insurer aware, because obviously they’re insured for a particular amount and if they go beyond that amount then there’s a huge risk of underinsurance.
“If there’s a claim and there’s a massive amount of stock value compared to what they were insured for then there’s clearly an issue for the claims award they’re going to receive.
“These days, we also have a just-in-time ordering culture and we don’t tend to necessarily have huge stockpiles in many different sectors and because that just-in-time system is under threat due to uncertainty, many firms are choosing to stock up on extra supplies of materials.”
He also pointed to Biba’s Business Interruption Disruption Template – a form launched in May to help tackle the issue of businesses being underinsured – as a tool brokers could use to ensure the right cover is in place.
However, he also stressed: “clients shouldn’t leave it to renewal; they should be advising the broker if they order a lot more stock as they do that.”
A spokesperson for the Association of British Insurers said: “In any circumstances where a business seeks to store extra stock or expand their business, it is vital that they make sure they have adequate insurance coverage in place.”
We believe in the potential of youths to shape their own futures. #Allianz, together with @sos_children & @VolVision, runs a digital mentoring program to help youths across the globe learn relevant career & life skills for a brighter future. @UNDESA #YouthDay #YouthDay2019 https://t.co/tImjJecywn— Allianz (@Allianz) 12 August 2019
- Blog: Unrated insurers - the risks for UK brokers
- ECB data breach demonstrates how using third-party providers can lead to cyber risks
- FSCS to compensate 14,000 Alpha policyholders as deal collapses
- Insurers throw support behind calls to ban use of hands free devices while driving
- Analysis: Protecting businesses against political risks
- QBE International posts loss following £51m Ogden hit
- Barton steps down as CEO of Wrisk