A survey conducted by the Chartered Insurance Institute has found that 54% of its members do not feel it is economically sustainable for the government to “step in as an insurer of last resort.”
The survey included 476 CII members and was conducted in October.
“Ultimately, no government can save every business,” said Keith Richards, CII’s Chief Membership Officer.
“Coronavirus has acted as a catalyst for some trends (for example, towards online shopping) and the government cannot have a ‘zero failure’ regime that prevents every business from closing.
“However, only the government has the tax raising powers to raise the hundreds of billions of pounds needed to transition to a post-Covid economy in an orderly way, that avoids the kind of suffering that happened, for example, in the 1930s.
The CII is urging insurance professionals and the government to reduce the need for legal proceedings similar to those seen during the business interruption (BI) insurance test case brought by the Financial Conduct Authority (FCA).
The professional body has called for a consensus among professionals on definitions where the same words and phrases are used in different contracts, to reassure consumers that two policies, which “look the same on paper”, cover the same risks.
The CII has also proposed an improvement to advice processes, as well as non-advised buying processes, to help clients understand insurable and non-insurable risks.
“While government cannot be the insurer of last resort for every business and individual, it can offer a wider safety net than insurers can raising money through voluntary premiums,” Richards added.
“The key is for the insurance profession to define roles and responsibilities in a clear and sustainable way, so that investors can have confidence and the economy can rebuild.”
