As brokers, we often hear recurring themes during client engagements. ‘We’ve never had a claim’, we’ve got robust procedures in place’, ‘our risk is minimal’, ‘we are happy with our current policy’, and even ‘this is just a tick box exercise’.
Sound familiar? These statements reflect common misconceptions that insurance is merely a contractual formality when, in fact, it is a strategic tool designed to protect your business when the unexpected happens.
Understanding the Depth of Your Policy
The financial impact of insurance is commonly viewed as onerous, leading many clients to underestimate its protective value. The real value of insurance is in what it delivers in the event of a claim. It is about more than simply satisfying requirements. Insurance should be viewed as a risk financing mechanism, not just a cost. Insurance is a strategic tool to protect your balance sheet, leadership and business community.
In today’s complex risk landscape, insurance is often perceived as a regulatory or contractual necessity - a ‘tick box’ exercise to satisfy external stakeholders. However, when structured correctly, it allows businesses to:
● Preserve capital by transferring exposure to insurers
● Maintain operational continuity during litigation or investigation
● Protect leadership and reputation in high stakes scenarios
When viewed through this lens, insurance becomes a critical instrument of resilience.
Why Wording Matters
It is tempting to assume all policies are created equal. They are not.
The small print - the clauses, the exclusions, the references to regulation - is often the line between a claim being covered or denied. A narrow policy may exclude certain professional services your business offers, regulatory investigations or fail to respond to emerging risks. Broad coverage ensures that leadership can act decisively without fear of personal exposure.
Policy wordings should be reviewed regularly to update clauses and references to regulation and ensure the coverage operates as intended. In some instances, policies not operating as they should, can cause serious problems when it comes to covering and defending a claim.
There is a fine line between having a claim covered and one being dismissed and it is therefore critical to ensure that the policy language is drafted in a way that works in your favour. This is where we can support you through this journey by offering valuable guidance on potential gaps in cover or where the existing cover is ambiguous. It is also worth noting that insurance policies should be designed to suit your business activities rather than a “one size that fits all” product.
Beyond the Premium
Confirming you have PI insurance to a third party may ‘tick the box’, but it is the breadth of cover that really matters. Without comprehensive protection, a single claim could erode years of profit or even threaten solvency.
As you enter the renewal cycle or explore coverage options for your business, think beyond price. A cheaper premium looks attractive, but it often comes at a cost of inadequate coverage or poor claims support. It is important to consider the insurer’s reliability and responsiveness. Saving a small amount upfront is rarely worth it if claims are delayed, disputed or denied altogether.
The Notification Process
Understandably, the nuances of when and how to make a notification under a policy may not always be immediately clear. However, with the right guidance, it becomes much easier.
It is important to note that notification obligations extend beyond claims. Material changes to your business mid-term can be just as significant. Whilst most policies include automatic provisions, coverage also includes thresholds for new funds / subsidiaries / acquisitions / mergers and their jurisdictions. Failure to notify your broker/insurer may risk jeopardising cover or damaging your risk profile. At Consilium, we can help you understand:
● What constitutes a ‘notifiable claim’
● Who is covered (and who is not)
● How business changes may affect your policy
Handled correctly, notification is simple. Handled poorly, it can be catastrophic. Most policies require written notice of a claim as soon as possible, not at renewal. Because policies are underwritten on a ‘claims made’ basis, it is the policy in place when the claim is made that responds, regardless of when the wrongful act took place. If it becomes clear that a formal claim is made against your business/director post renewal, late disclosure can seriously jeopardise a claim.
It is crucial to understand the scope of your cover. Your broker should guide you on who and what is covered, the importance of timely notifications and how mid-term business changes could affect your policy.
New Pressures and Exposures
Macroeconomic shifts, geopolitical tensions, digital dependency, AI-driven errors - risks today look nothing like they did five years ago, and policies must be reviewed against that backdrop. That means checking for:
● Cyber and data breach exposures
● Cross-border gaps in global programmes
● Contractual indemnity exclusions
● Emerging perils
At the same time, the financial lines market is shifting fast, fuelled by Managing General Agents and data-driven underwriting, using advanced analytics and open-source intelligence to assess risks with greater accuracy.
To stay ahead of evolving threats, insurers are focusing on cross-border coordination, scenario planning and benchmarking. Staying proactive is no longer optional - risk appetites can shift quickly, as shown during the global financial crisis and pandemic.
Reframing Insurance
Insurance is often perceived as a financial burden. In reality, when structured strategically, it becomes a powerful tool to preserve capital, protect leadership and keep the business running through disruption.
The businesses that treat insurance as a strategic tool will be the ones that come through the next crisis intact. A proactive and thoughtful review of your insurance can reveal gaps, outdated coverage and opportunities to strengthen your safety net.
With the below checklist, you can ensure your policies remain aligned with your evolving business model, market conditions and governance priorities:
● Reframe insurance as a priority rather than an afterthought
● Consider worst-case scenarios and how insurance mitigates financial impact
● Recognise insurance as a reliable safety net for business continuity
● Ensure coverage reflects current business operations or market dynamics
● Identify and address outdated, ambiguous or insufficient coverage
● Avoid complacency
● Collaborate with legal coverage counsel and claims specialist.
All in
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