Trade body collaborated with brokers and insurers to create the template.
The British Insurance Brokers’ Association (Biba) has launched a standard business interruption (BI) Declaration Template to help reduce underinsurance.
Biba detailed that the template clearly sets out, with guidance notes, which figures need to be declared, in relation to what period and how these feed into the BI sum insured.
The trade body stated that form had been created in conjunction with its Property Committee and Insurance Brokers’ Standards Committee.
The move follows the guides Biba created for brokers and customers in 2015, which addressed the issue of underinsurance in commercial insurance.
The trade body explained that the resultant industry discussion had highlighted particular issues with assessing correct levels of cover for business interruption insurance.
In addition, a survey by the Chartered Institute of Loss Adjusters (CILA) found that one of the biggest issues causing BI underinsurance was around the failure to include wages in the gross profit calculation and the lack of annual declarations.
Opportunity
Malcolm Hyde, executive director at CILA, said: “Declaration policies provide the opportunity to get this right.
“An appropriately worded calculation declaration could go a long way to avoiding this underinsurance.”
Biba executive director, Graeme Trudgill added: “It is vitally important that businesses have the right level of cover in place on their BI insurance to enable them to get back to the trading position they enjoyed before a claim.
“Ensuring that clients submit declarations and that the figures used in the calculation of the sum insured are accurate is of great value in setting the right level of cover.”
He continued: “Promoting the use of a standard form of declaration that needs to be submitted each year will definitely help negate this issue.”
Biba technical services manager, Martin Bridges concluded: “We engaged with insurers and brokers to create the template and this collaboration will aid customers and help brokers to maintain excellent professional standards.”
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