Multiple factors, including the COVID-19 Pandemic, Brexit and a surge in demand, are impacting insurers’ ability to fulfil property claims. Additionally, there is a regulatory deadline looming in March 2022 when all insurers will need to be able to evidence Operational Resilience within the supply chains which are currently under significant stress. For many the risk has become a reality and Procurato are supporting our clients to resolve these issues. The Pandemic had many unpredicted impacts across the business world and it will take quite some time to see many of the true consequences wash through. In the insurance sector, as well as the immediate operational logistical challenges for businesses, one emerging consequence has been the way in which Business Interruption (BI) claims have been both settled and fulfilled. Aside from the implications of the FCA Test Case on the Property Insurance sector, one of the biggest areas of challenge has been the ability for insurers to fulfil the claims they have received and agreed to settle.
With the looming arrival of the joint-Regulatory Operational Resilience Impact Tolerances Policy, which becomes effective in March 2022, the Pandemic has highlighted to many insurers the potential and actual vulnerabilities in their Supply Chain. Many undoubtedly see Claims Fulfilment (often by third- and fourth-party suppliers) as falling within the definition of Important Business Services, and the inability by suppliers to stay within business tolerances as a potential regulatory failing. This risk has been crystallised in some cases by the shortage of available suppliers and resources to manage the claims which have emerged as lockdown lifted – particularly in relation to Business Interruption where the fulfilment of claims at such a critical juncture can be the difference between survival and collapse.
Procurato is currently working with several clients who have been on the front foot in relation to ensuring BI claims are fulfilled, regardless of the impacts of the pandemic. Our Associates are ensuring the insurer has a resilient supply chain (Loss Adjusting, Building Claims Fulfilment suppliers, Legal Panels) at a reasonable cost at a time when these resources are scarce, and ensuring the suppliers are focused on helping to mitigate the issues at pace. They are also supporting our clients to benchmark and stress test existing and potential future suppliers to ensure that they can meet their regulatory obligations.
Our Associates foresee a constraint on Loss Adjusting and other Property-related services now and for the remainder of the year, as a consequence of the pandemic and also the emerging impact of Brexit upon the available labour resources. We recommend insurers and their Regulated office holders redouble their efforts to make sure they have plans in place to maintain customer commitments and service standards and review their Supply Chain Operational Resilience
If your business is undergoing similar challenges to those outlined above, whether because of Covid-19 BI Claims or because you are concerned about the general resilience of your supply chain, we would be delighted to talk to senior leaders on your team about our experience and knowledge of the situation and give guidance on the issues and mitigation approaches