The Bank of England is calling for the government to work with British insurers in preparation for possible future major shocks to the UK.
A statement made by BoE executive director of insurance, Anna Sweeney has highlighted the danger of “protection gap” as firms still recovering from Covid-19 are hesitant to cover major risks.
Speaking at a conference earlier this week, Sweeney said: “The pandemic has highlighted risks around unintended exposures in insurance contracts and unexpected links across risk areas under extreme circumstances”.
“The high profile of disputes over business interruption claims has done nothing to dent the popular caricature of an industry that is happier to accept premiums than to pay claims”
She added: “This matters: it could have an impact on demand for policies, if businesses perceive them not in practice to offer the cover they need, not just in business interruption, but in indemnity policies that cover non-specific perils.
“This could create a drag on real economic activity and productive investment that cannot take place without appropriate insurance coverage”.