Companies have 'poor understanding' of insurance policies, Mactavish report claims

Mactavish says a lack of understanding of insurance policies among UK boards leaves them at "significant risk" of insurers not paying out on claims.

Issuing its stark warning today, the insurance governance and consulting group added that, while the Insurance Act 2015 and the new Corporate Governance Code may have increased the focus on risk at board level, board members and senior directors do not adequately appreciate all of the dangers and threats facing their organisations -- an added factor in the probability of insurers not paying out of claims, it says.

CEO of Mactavish, Bruce Hepburn, said: “Generally speaking there is low board engagement in insurance, which is out of line with their focus on other capital instruments. All chief financial officers, for example would know about their banking covenant conditions but very few would have knowledge about the limitations of their insurance cover.”

The Mactavish data goes on to claim that 45% of larger, more complex commercial claims are currently disputed by insurers, and that on average they take three years to resolve, with settlements of around 60% of the initial estimated values.

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