Insurers risk their reputation without goods in transit insurance cover at UK-EU border, says GlobalData
Ever since the UK voted to leave the European Union in 2016, there has been public recognition that border delays and implications related to border controls will be inevitable once Brexit was formally completed. Against this backdrop, the absence of goods in transit insurance cover for perishable goods puts the reputation of insurers at risk, says GlobalData, a leading data and analytics company.
Jazmin Chong, Insurance Analyst at GlobalData, comments: “The Brexit transition period ended on 31 December 2020. Since then, trade into and out of the UK has been held up by border delays, especially in France and the Netherlands. As a result, long waiting times at the UK border have resulted in the increased damage of goods in transit related to stock deterioration.”
GlobalData’s 2017–20 UK SME Insurance Surveys* find that SMEs during this period have indicated that implications related to Brexit and political and economic stability were their biggest business concern. This of course changed in 2020, when the COVID-19 pandemic became their main worry instead. Yet Brexit remained a major concern to SMEs in 2020, with 23.8% of all SMEs either very or extremely concerned about the resulting economic implications.
Ms. Chong continues: “The impact of Brexit has raised questions of whether cover for goods in transit will apply to any perishable items affected by the delays. Such cover is currently only related to vehicle accidents and covers the breakdown of refrigeration equipment. Most policies will not cover general loss, damage, or expenses caused by delays.”
Insurers’ reputations could suffer as claims related to damaged goods from border delays are rejected, leaving clients unhappy. Considering the current economic struggles related to the pandemic, insurers should use this opportunity to build trust in the industry.
Ms. Chong concludes: “Creating products that deliver a level of risk mitigation for the ongoing border delays and any resulting financial losses help insurers attract and retain customers in the long-term. This is especially true given that consumers are increasingly influenced by a company’s brand image rather than targeted advertisements.”
*Based on GlobalData’s 2017, 2018, 2019 and 2020 UK SME Insurance Surveys of over 2,000 businesses annually.