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17 Jun 2021
Trade Credit Insurance ends on 30 June 2021
Trade Credit Insurance - what the environment look like as we emerge from the Second Lockdown.
Briefly, the Trade Credit Insurance protects manufacturers, traders and service providers against losses from non-payment of a commercial trade debt. For example; If a buyer does not pay (often due to bankruptcy or insolvency) or pays very late, the trade credit insurance policy will pay out a percentage of the outstanding debt. However, this policy which has benefited over half a million businesses is ending on 30 June 2021, according to Association of British Insurers (ABI).
PS: Follow the links below for additional information
https://lnkd.in/dt-a3-k
https://lnkd.in/dW5e2Yu.
28 Sep 2020
‘Pandemic Re needs to get up and running’
Update on Underwritten losses, due to COVID-19 triggered Events
As of June 2020, we published a paper where we discussed the fact that Lloyds of London and Other Insurer thought up to 70% of Underwritten losses may be categorised into 3 groups;
- Event Cancellations from high profile or local event = 33%,
- Property Coverage cover in response to the pandemic = 30%,
- Credit losses that arise from credit crush = 7%.
Additionally, we also mentioned the fact that many Policy Holders will be faced with difficulty making successful Claims under particular Property Coverage for events that were triggered in Phase 1 of this COVID-19 induced crisis. We also mentioned the fact that Policy Holders, need to purchase cover as provided by Pandemic RE, in the event of a resurgence in Q3/4.
As of September 2020, and according to Aston Lark group chief executive Peter Blanc; “Pandemic Re needs to get up and running” in order to mitigate the detrimental economic impact of the coronavirus crisis for the Events Sector, as organisers struggle to secure insurance coverage for Covid-19.
Pandemic RE is a very specific Insurance product that we hope many Businesses will purchase once it’s ready and available, given the fact that, many hadn’t bought its predecessor which had provisions for triggered events that occurred in Phase 1 of this crisis.
And, there lies the frustration in dealing with losses that arise from COVID-19. Business need to speak to their Broker/Insurers to really understand the cover that they’ve got, as well as, look at the right moves that they [in the interim] can adopt for dealing with the resurgence of this virus, as the Industry and Government works on developing and announcing products that will form part of Pandemic RE.
Impact of COVID-19 Triggered Events on Businesses Insurance Policies
Forensic Analysis of Insurance Claims
We were invited to a Business Interruption (BI) Webinars where some of the leading Insures, Brokers, Insurance Specialist and Others Specialist with Forensic Analytical skills, spoke on the subject, by asking 4 pertinent questions, which may be stated and listed as follows;
- What does the environment look like during or after the first Lockdown? And, what can, or is being done, as we head potentially into a patchwork of second Lockdown in Phase 2 of this crisis?
- How should Businesses (with the help of legal advice) read their agreement in order to understand the policy cover, with respect to the COVID-19 induced disruption that are neither, immediately nor naturally, fall within the traditional parameters of BI insurance, but may be stipulated on various and specific policy extensions or may be limited by specific exclusions?
- What cash flow consideration can be deployed immediately to help Policyholders, irrespective of the fact that, they may be contemplating actions to submit a Claim for BI on their policy?
- Also, how should Policyholders prepare and particularise their COVID-19 Events Claim files?
In a sense, the Webinar was quite didactic, and the best way to learn about the internal working of the Insurance Industry, as such, we published an article that covers key aspects of the discussions from this Webinar, which may now be viewed and downloaded from LinkedIn.
LinkedIn Page: https://www.linkedin.com/posts/criticalprojectcontrolsltd_forensic-analysis-of-business-interruption-activity-6684878397702733824-8BYB
The Contest Between COVID-19 and The Economic Recover
Clearly, we didn’t have to look far to find evidence that we are living through an unprecedented situation in terms of what’s going on with this pandemic. COVID-19, has caused broad swaths of the economy to be locked-down. Consequently, we’re seeing historic levels of unemployment, GDP contraction in Q1, with further expectations that it’s going be much more dramatic in Q2. Furthermore, we see consumer confidence dropping, the general population being urged and asked to practice social distancing, self-isolation etc. Nevertheless, for the first time in so many months, we see some tentative steps finally appear on the path for an economic recovery. And, it is with references to these points that I took the time to publish an article on the subject as it pertains to the Construction and Infrastructure sector by mentioning, amongst other things, the need to;
- assess and re-baseline Elements for delivering Projects i.e. Budget Costs | Project Duration | Risk Register | Scope of Works,
- renegotiate and avoid or resolve contractual matters concerning the abovementioned elements, given the fact that, Parties to executed contracts can no longer meet their respective initial expectations or obligations,
- deploy a lot of ingenuity to exit from our pandemic-induced economic slump.
From the foregoing, the above-mentioned article may now be viewed and downloaded from the following web site on LinkedIn.
Delayed | Re-Baselined | Completion now expected in 2022
Elizabeth Line in Central London, has It's Date of Completion slip until 2022, and Budget increased by an additional £1.1bn
The extensive exercise to Re-Baseline Projects that have been impact by COVI-19 Events will be an ongoing issue for the majority of businesses, given the fact that, the continued effort to end this virus induced lockdown, and subsequent phased reopening of economic activity, will not spell a return to the "old normal." According to The Independent News Paper, the latest news from Crossrail Ltd (as captured in the video link mentioned below) is that; due to the impact of COVID-19 Events, the date for opening and the budget for completing the Elizabeth Line in Central London, have respectively slipped until 2022, and increased by an additional £1.1bn.
It looks like Crossrail Ltd is taking steps during this Recovery Period to, amongst other things, address the following key points;
- assess and re-baseline Elements for delivering Projects i.e. Budget Costs | Project Duration | Risk Schedule | Scope of Works;
- renegotiate, avoid or resolve contractual matters concerning the abovementioned elements, given the fact that, Parties to executed contracts on the project can no longer meet their respective initial expectations or obligations.
Video Link - https://lnkd.in/etfpptK
State of the Insurance Industry
As of Q2 of this year, Lloyds of London was forecasting for the Insurance Industry, losses of up to $203 billion globally for non life insurance, and the break down of the forecasted losses were follows:
1. Underwriting Losses: $100 billion in losses from Claims that arise from Business Interruption triggered events, where the policy protection purchased covers the impact of COVID-19;
2. Losses from Investment: The inflationary impact of the Recession that we are currently experiencing, and its impact on Claims in the future which affects Insurers investment funds. The asset value of these investments would fall by $103 billion
It has been a couple of months since Lloyds made those predictions. As of Q3, and according to James Kent of Willis Re [in discussion with Paul Lawrence of Hiscox Insurance], the industry is predicting less than $100.0 billion, where the Underwritten losses may be categorised into 3 groups;
- Event Cancellations - from high profile events such as the Olympics to more local events,
- Property Coverage - where Bussiness have bought a form of property and business interruption cover in response to the pandemic,
- Credit - losses will arise from credit crush
For further information on the discussion between Mr Kent and Mr Lawrence, as mentioned above, please visit the link to the video stated below;
