About Bruce Hepburn Bruce Hepburn is the founder and CEO of Mactavish, a leading independent outsourced insurance buyer and claims resolution expert in the UK. The firm publishes widely cited research into the commercial and corporate insurance sectors and works with policyholders to deliver improved insurance solutions. Bruce has led Mactavish through every phase of its development over more than two decades of work and is intimately familiar with all aspects of its business. Contact Bruce Hepburn CEO, Mactavish 22a St. James’s Square, London, SW1Y 4JH, UK Tel: +44 02070 467955 E: brucehepburn@mactavishgroup.com www.mactavishgroup.com into practical, easily understandable terms. Obviously, some insurance claims do reasonably sit in a grey area where liability or quantum are not immediately clear. In these cases it will be necessary to seek out judicial insight. However, disputes currently occur for vastly broader reasons than this, and for businesses navigating this hard market, the priority must be to secure well written insurance policies that minimise room for uncertainty undermining the quality and reliability of your coverage. Impact on the Legal Sector The results of the index certainly indicate fantastic opportunities for the legal sector itself, with insurance solicitors and barristers in higher demand that ever before. However, as insurance contracts come under far greater scrutiny in the courts, some authors of those contracts will increasingly find themselves under pressure from employers and clients. The legal sector may soon find itself in a litigious minefield of its own. In some cases already, the dispute has focused on allegedly defective policy drafting, creating the possibility that some law firms could themselves have some liability for the unpaid claims as this litigation works through the system. While the opportunities to profit from the increase in legal claims disputes are clear, in this escalating conflict between insurers and policyholders taking place at the same time that risks are evolving rapidly in an environment shaped by multiple political and economic crises, the legal sector will need to tread carefully to avoid being caught in the crossfire. Reputation of the insurance sector and economic growth in the balance For insurers, policyholders and the wider economy, the consequences of an increasing number of claims disputes ending up in court are far starker. For many SMEs currently struggling to survive amidst growing economic turmoil, the refusal of insurers to pay claims naturally puts them in a challenging position. Many who find themselves in this situation may already be in a financial crisis due to the loss event that has led to the insurance claim, and therefore far from a position to launch a costly and slow legal action. If businesses do not have confidence in the insurance market, the impact on the economy can be significant as companies become less likely to take the risks required to deliver growth, whether that be expansions into new markets or the launching of new products or services. This is why it is so concerning to see the insurance industry damaging its relationship with its customer base and reducing the value of its products just when they are most needed. The Uncertain Future Ahead A perfect storm of the war in Ukraine, Brexit, global inflation, financial market instability, the impact of sanctions and new classes of risks emerging continue to extend the lifecycle of this hard market – driving premium rates up and coverage and claims payouts down. As a result, it is likely that we will continue to see a high volume of legal action being pursued by policyholders. The insurance market itself must face up to its wider responsibility and work to meet the needs of its customer base. At a time of widespread economic turpitude, the industry must stand by and support UK businesses by selling clearly drafted products and adjusting them in line with expectations, rather than further threatening their chances of survival. SPECIAL FEATURE 43
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