A new report from Mactavish has claimed that brokers and insurers are “increasingly offering inadequate one-size-fits-all” insurance policies, rather than wordings that are adapted to meet specific needs.
It warned that this will lead to more disputes over claims and an “even further decline” in levels of trust in the insurance sector.
The report added that Covid-19, tighter governance rules and regulations facing employers, more global trade barriers and growing business complexity are all increasing the need for “more transparent, clear and targeted” insurance cover, just as standardisation is becoming the industry norm.
Mactavish also warned that generic policies are being rolled out across vast distribution networks, and sold to clients, with “little regard” to their sector, size or individual characteristics.
It said: “Such off-the-peg policies may cost less for brokers and insurers to produce but it says those savings do not translate into valuable insurance purchases for policyholders.”
Bruce Hepburn, CEO at Mactavish said: “Insurers refusal to cover Covid-I9 impacts – against the context of ambiguously-worded business interruption policies – echoes wide client experience across all complex insurance classes.
“Clients are being let down by policies that are not fit for purpose. In an age of growing complexity, rather than crafting highly-targeted wordings designed to meet clients’ unique requirements, brokers and insurers are increasingly developing one-size-fits-all approaches.”
He added: “Too often, generic policies are not being adapted – partly due to a scarcity of sufficiently skilled underwriters and brokers – leaving policy wording ambiguous and with significant gaps in coverage.
“This enables different inferences to be drawn as to whether a provider should or shouldn’t pay out on claims – as seen with Covid-19 and many other complex claim disputes. This is the rule, not an exception.”