Know the Drill - August 2020

Know The Drill - August 2020

Welcome to the August issue of Know The Drill.

The last couple of months in insurance have been “interesting”. We have seen insurers take a very conservative approach on the liability insurance lines - particularly Directors and Officers (D&O) insurance. D&O insurers are typically;

1. not looking for new business or

2. not providing higher limits on existing clients programs or

3. looking for increased premiums on existing programs

Insurers are concerned that we may see a few liquidations as cashflow dries up/ projects come to an end and there is not a lot of new projects in the pipeline. This is making it difficult when re-marketing annual insurance programs to ensure that we have the best pricing/ program for clients. We have to negotiate hard to find an alternative insurer for the Directors and Officers Liability insurance.

If you are looking to make changes to your D&O program, ensure you get in touch early so we can ensure the best possible outcome.

Contract Works insurers on single project policies are also continuing to push up rates and restrict coverage where they can. This is really a continuation of the hardening of the insurance market that we have seen since the start of this year. Aon has seen a drop in the number of contact reviews which indicates that there isn’t as many projects coming through the pipeline. It will be interesting to see how the insurers re-act to this as they still have pressure to make their budgets – but with fewer projects starting prior to Christmas this may lead to some competition.

In the current environment we are aware that clients are looking to save and make changes. We ask that you engage with your Aon broker so that they can assist you in the best way possible.

Employment practices insurance

There are a number of factors that we see on the short-term horizon that will potentially see a number of employers/ contractors reviewing staffing numbers again. This may result in staff being made redundant or moved into other roles within the organisation.

Before starting any restructuring of staff we strongly suggest that you check your liability policies specifically for any employment disputes cover. This cover could be provided by a specific employment disputes insurance policy or as a part of a management liability policy (such as AIG PrivateEdge; NZI ProSelect; QBE QPack or Vero Liability LealEdge or AonEdge ).

These polices may have some specific requirements that you may need to adhere to before making any restructure decisions. These procedures are to ensure that you are complying with the legislative requirements and so the insurers can defend the organisations position should any claims be brought by (previous) employees.

Credit Insurance - Covid-19 Impact

The credit insurance market is expecting a significant increase in payment defaults and insurers have started to implement plans to review and reduce their exposures in certain countries and trade sectors, particularly to reduce credit limit capacity where lower trading levels are expected. Many buyers in the construction sector have been particularly affected by the insurers cover reduction process.

Trade Credit Insurers will need transparent and up-to-date information, especially around liquidity and cash flow forecasts, to continue to write credit limits on businesses. To prevent supplier credit being restricted, businesses will need to share updated business and financial information with credit insurers in the same way they would with their lenders. To ensure confidentially of the information, all insurers offer non-disclosure agreements as part of their process for collecting and reviewing financial accounts.

Click here to read more about Trade Credit Insurance.

The Privacy Act 2020

With effect 1 December 2020, the Privacy Act 2020 will come into force and replace the Privacy Act 1993.

Its key purpose is to promote people’s confidence that their personal information is secure and will be treated properly. The intention is to update New Zealand’s privacy law framework and to bring New Zealand in line with international privacy protection policies.

Click here to view a snapshot of the changes.

If your organisation suffers a privacy breach from a cyber event, what is the action plan to resolve it in a timely manner and meet the requirements of the Privacy Act?

Cyber risk insurance provides the forensic, legal expertise and management support to assist you notifying in accordance with the Act. This includes appropriate response to notify your clients and customers to meet the Act and ensue the trusted response your customer would expect.

Click here to find out more about Cyber Risk Insurance.

Know the Drill - August 2020