Aston Lark Supplement

Navigating the SME Insurance

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Fighting cyber crime together

Malicious attacks and breaches have become more sophisticated, so it’s worth knowing what threats your business faces.

From damage to your business’ hardware and software, to the loss of sensitive personal and client/supplier information, here are some of the risks you should consider:

INCIDENT RESPONSE

This section of cover will pick up all costs involved in responding to a cyber incident in real time. Costs include:

• IT security

• Forensic specialist support

• Legal advice in relation to data security breaches and the costs associated with having to notify any individuals/companies that their data has been stolen.

CYBER CRIME

This section covers third parties misleading you into paying an erroneous bank and theft of your personal funds. It also covers cyber extortion, so if your system is attacked by ransomware, the policy will pay for the hacker’s ransom and restore any data damaged in the process. This is the most common form of cyber attack.

SYSTEM DAMAGE AND BUSINESS INTERRUPTION

This section covers two areas:

1. The system damage covers the costs to repair and restore data in the event your computer systems were damaged in a cyber attack.

2. The business interruption covers you for your loss of profits and additional costs that you have incurred as a result of a cyber attack. The policy operates on a franchise basis and has the longest indemnity period in the market at 12 months.

With a cyber insurance policy, you could easily be covered against these risks. The incident will be managed from start to finish by an expert response team.

For more information, please contact:

Tom Montague - New Business Account Executive

M: 07788 427588 E: tom.montague@astonlark.com or visit www.astonlark.com

Welcome

WITH ALL this talk of inflation, recession, and a cost-of-living crisis at the moment, business owners might be forgiven for taking their eye off the ball when it comes to insurance. That would be a mistake, however – because as we’ll explain in this supplement, having the correct insurance cover should be one of your top priorities.

Underinsurance

We need to talk about underinsurance – urgently. It’s escaped most people’s notice that with construction costs rocketing, the rebuild value of their company premises may well have risen too. In the event of damage, such as a fire, storm damage, or water damage, that means you could be severely out of pocket when the settlement is made. In the pages that follow, we’ll explain what you can do to protect yourself.

Cyber crime

The public’s awareness of cyber crime is higher, thanks in part to news reports about hackers and the growing problem of ransomware attacks. It’s another issue that executives need to stay on top of,

as the financial and reputational damage from such an attack is likely to be considerable. Once again, the insurance sector offers peace of mind with its coverage.

Bad debt

The risk of a large customer failing to pay you, perhaps because of insolvency, is another distinct possibility in these economically trying times. We’ll discuss this problem – and the solution – in an overview of the current UK market.

Getting the right advice

In each case, the brokers at Aston Lark are ready to help.

Buying insurance from them isn’t the same as using a comparison site. The crucial difference is that you’ll be dealing with human beings who care about the success of your business and have the specialist knowledge to draw up precisely the right policy for you.

With the aid of case studies, we’ll demonstrate how Aston Lark’s

expertise can be a lifesaver for businesses like yours. In addition, we’ll hear from the company’s Commercial New Business Sales Director about which urgent issues need to be addressed in 2023.

On that score, Aston Lark has much to be proud of. Its brokers, working from over 70 offices across the UK, make a point of nurturing professional relationships with their clients and getting to know what makes their businesses tick.

There are good reasons why Aston Lark is one of the UK’s top independent chartered insurance brokers. Read on and you’ll discover exactly what they are.

The safest pair of hands

With their expert knowledge and experience, an insurance broker can save a business from going under Online services simply don’t match up, as Aston Lark sales director Lewis Doyle explains

WHAT’S THE most fulfilling part of working in insurance? To answer that question, Aston Lark’s Lewis Doyle recalls a client whose premises had been ravaged by fire.

“He said that if he hadn’t used us, and taken our advice regarding the cover to buy, he would have lost his business and made his entire team redundant.”

As Commercial New Business Sales Director, Lewis’s top priority is to secure the right cover for organisations at the optimal price. “We know times are tough right now, so if we can deliver efficiencies, then we know we’re making a difference.”

After joining the industry in 1998, Lewis took up a position at Aston Lark in 2005. Four years before that, a desire to work directly with customers led him to the broking side.

These days, as head of the UKwide commercial sales team, his role is to help guide companies – many of them SMEs – through a myriad of options so they can go about their

business with confidence. Other insurers are content to sell policies impersonally, via the internet. But the broker-client relationship is a crucial part of Aston Lark’s success.

Expert advice

“Internet searches often direct SME businesses to buy insurance online, just like we do when buying our holiday travel insurance,” Lewis explains.

“The issue is, no advice is provided, so insurance is bought without the advice of an expert.

“We help our SMEs get value by ensuring they have the cover that they really need, and we do this by talking about their business, so we can help them buy the right product.”

Due to our parent company being global broker Howden, we have the leverage and scale to get our clients great products at a competitive price”, says Lewis.

At the same time, businesses are continually growing and evolving

– which might mean that their insurance cover fails to keep pace.

“This is another reason why it’s important to engage with a broker,” he adds. “We can make sure the insurance protection is relevant.

“The environment will present challenges to a business. Whether it’s Brexit, a pandemic or the economy, it can result in the priorities of a business changing the way they deploy their services.

“Our job is to make sure entrepreneurs remain protected by insurance, whichever direction they take.”

The big issues

Sometimes SMEs will be unaware of issues that potentially threaten them, such as underinsurance – a hot topic in the insurance world.

“Simply put, the cost to reinstate or rebuild a property has escalated so rapidly that, according to our research, over 80% of properties are inadequately insured1,” says Lewis.

“That means at best, in the event of major damage to a building, such as flood or fire damage, there won’t be enough money paid by the insurer to reinstate the property.

“At worst, insurers in some circumstances can keep the premium paid, cancel the policy and pay no claim at all. So, ensuring insurance remains fit for purpose is essential.”

Cyber presents another major challenge. “We see clients insuring their desks and chairs without fail year on year, but not everyone buys cyber protection,” Lewis notes.

“Whether it’s stolen customer data or payment fraud, businesses are at risk, and it’s really important to consider the right insurance protection.”

Risky business

It can be very tempting to buy a cut-price policy online without consulting a broker. If the worst comes to the worst, however, the results could be ruinous.

What would Lewis say to someone

thinking of taking the budget route?

“I suppose I’d ask them to think about how they engage with other professional service providers,” he replies. “If they were involved in litigation, would they want to sit down with an expert or buy a product without any advice?

“It’s the same with insurance. It’s one of those products that isn’t that relevant, until it is. And when it becomes relevant, it means something has happened – and at that point, the difference between the right coverage and an off-theshelf and non-advised solution can be the difference between being paid by an insurer or not.”

Insurance policies can be complex, he points out. They have conditions that impose certain obligations on a business, such as handling waste as specified or securing property in a certain way.

“We help our clients understand these obligations. If these conditions are hidden in a large policy’s wording, it’s down to the client to digest this – all while they’re busy running their business.”

During the pandemic, Aston Lark worked with a number of clients to retrieve some of their premium from insurers – for example, when they weren’t using vehicles.

“We proactively helped them remove unneeded cover,” says Lewis. “One client said that the return of premium helped ensure he was able to pay his staff that month.”

“Our job is to make sure entrepreneurs remain protected by insurance, whichever direction they take.”

1. Property insurance valuations and underinsurance (bch.uk.com.

A tale of two outcomes

DAVID runs ALP Ltd, a 20-year-old precision engineering company that makes door handles. It has 11 staff and turns over £3 million a year.

Most of the work is done by two CNC machines with a very small amount of welding at the end of the process, supported by a very skilled, longstanding workforce. The firm also owns the building, a small industrial unit.

David needs to renew his insurance for a year. ALP’s broker, Julie, has mentioned that rates are increasing, so David decides to look online. Here’s how the two scenarios play out.

David’s broker Julie arranges a rebuild cost assessment for ALP’s unit. The cost is 50 per cent more than David expected, but he reluctantly agrees to increase the sum insured.

He leaves everything else the same as before. Julie has spent a lot of time understanding his business. She has disclosed the type of work he does to his insurer, and the use of composite panelling in the building because they have surveyed the risk.

David and Julie discuss reducing business interruption cover to 12 months, but Julie advises against this, especially as the lead time for a new CNC machine would be around a year.

David opts to buy his insurance online, pays immediately, and receives his documents via email. Everything matches up with what he put online and seems sensible to him.

Most of the policy is the same as before, and upon reading the information supplements and paperwork one evening, he feels like he has made a shrewd move.

Reducing the business interruption seems smart. David even checked with the suppliers of his CNC machines. They have a lead time of just under a year, which works nicely. He wouldn’t build the building the same way anyway and thinks a simple modern industrial unit design wouldn’t take long to build.

David’s broker Julie normally schedules meetings with him twice a year and researches the needs of the business and the wider industry sector.

Julie’s advice is most useful when he isn’t sure if they need to cover something differently. Often, special requests from customers aren’t as straightforward as just adding more cost, and sometimes he’s surprised that what appears to be additional cover comes as part of the policy.

Sometimes Julie insists on certain bits of cover. Insurers have seen all the tricks and it’s impossible to skimp on the cover needed, so honesty is the best policy, she says. She asks lots of questions to make sure everything is on paper. There are admin fees for major changes, and sometimes a slightly higher premium.

Their conversations are simple, David doesn’t feel at the mercy of documentation, and regulation is done for him. When he needs to change a vehicle, he just rings up, and when he has a big stock order, he just emails to increase the insurance.

David knows his business better than anyone and feels insurance is simple; most people do their car and home insurance online anyway. There are some frustrations, however.

He is much more reliant on his memory to update his insurance. He isn’t sure about some bits, so makes a best guess; and he can’t stand when he has to call, instead of getting his broker to do this. When he does want to check on the cover, his insurers can’t offer advice. They only cover what he’s requested.

David thinks it’s obvious what he is asking for, as it’s a simple business. What worries him most is that, when he was setting up the policy online, it was hard to find a pre-set description that accurately portrayed what ALP does. He had relied on his broker for advice on what other precision engineers were doing with their cover and what he should keep an eye on.

He assumes that if it does come to a claim, he can show the insurers that there was no better description in the options.

An accident happens

David’s employees are working when a spark ignites in the welding area at one end of the unit. Everyone gets out safely, but the fire causes significant damage to the buildings, one of the computerised CNC machines and a lot of his stock.

MAKING A CLAIM

When David phones Julie after the fire, she comes to the unit within the hour. She speaks to the insurance company for him and the next morning the loss adjuster arrives. After discussions, she later confirms that he’ll have an interim payment within a couple of weeks to allow him to find alternative premises.

It takes a few months for the claim to be paid in full, but by that time, work is underway with contractors to get his unit rebuilt and the new CNC machine is on order. His employees are still being paid and, although production is limited, he is still able to fulfil some of his orders, so customers are sticking with him. It won’t be easy for a year or so, but David’s business will survive.

David calls his insurance company, is put on hold for 15 minutes and told someone will assess the damage in a few days. He struggles to work out his next move.

When the loss adjuster arrives, she looks around and tells David he may be underinsured. Some composite panelling wasn’t mentioned in his application, and when he explains what the company does, she points out that’s not what the business description on the policy says.

Even if the insurer agrees to settle the claim, it’s likely David will be out of pocket by as much as 50 per cent. His business won’t survive this. Also, a new CNC machine will take almost a year to source, so his business interruption cover won’t see him through.

The outcome

The insurance company decides that, had they known exactly what David’s business was doing, they would have charged a much higher premium. The presence of composite panelling concerned them too, even though he’d ticked the box for “standard construction”. They ruled that this was non-disclosure – and that as the use of heat and the presence of

composite panels was the cause and spread of the fire, they wouldn’t pay his claim.

David was underinsured by around 50 per cent and had an insufficient indemnity period for his business interruption cover. With the online insurance he thought he’d bought cheap, his business fails – a fate he could have avoided if he’d continued to use a broker.

Broker Online

Real and present dangers

Given the impact of the cost-of-living crisis on business, it’s important to protect yourself against cyber crime, underinsurance and customers failing to pay you

IN THE aftermath of the Covid-19 pandemic, UK businesses are feeling the pinch just as much as individuals are.

Energy prices skyrocketed in 2022, helping to push inflation above 10 per cent – a 40-year high. Supply chains have been disrupted and a tight labour market is adding to the upward pressure on wages.

For beleaguered SME owners, reviewing insurance cover might not seem like an obvious priority at a time like this. But as we explain below, the prevailing economic difficulties make it imperative.

Economic challenges

Throughout 2022, survey after survey found that many of the UK’s 5.5 million SMEs were worried about the problems they faced.

The prospect of higher inflation, reduced consumer spending and lower growth has loomed large. Even before Russia invaded Ukraine, the global demand for oil and gas was rising sharply.

In the midst of that conflict, and taking lockdowns in China into

account, the UK’s manufacturing, wholesale, and retail sectors have understandably been concerned about supply chains.

At the same time, unemployment is exceptionally low and filling job vacancies is difficult. As a result, there’s little scope for lowering wages and mounting pressure to raise them.

Why the right insurance is vital

In such a gloomy environment for businesses, the risk of customers failing to pay you – perhaps because they’ve gone bust – has intensified. And since the knock-on effects could devastate your firm, it’s crucial to have reliable trade credit insurance, which covers you in the event of customer insolvencies and payment issues.

Underinsurance is another issue to consider as a matter of urgency. Given that building costs have spiralled upwards in the 2020s, the cost of rebuilding your premises could be higher than you think.

If your building is damaged and you make a claim, the final settlement could be substantially

lower than you’d bargained for. In fact, it’s no exaggeration to say that the shortfall could leave you thousands of pounds out of pocket. You also need to think seriously about cyber criminals. Stories about ransomware attacks on corporations frequently make the news, but what’s less well known is that SMEs are regularly targeted too.

The scenarios outlined above –bad debts, underinsurance and cyber crime – are real and present dangers that could cost you dearly. That’s why insurance isn’t a luxury, but a necessity.

Tips on tackling costs

Shop around. Try to get a better deal from another supplier, then ask your existing one to match their prices.

Is hybrid working an option?

If employees work from home more often, you can look at reducing your office space.

If you can’t raise wages and are worried about staff looking elsewhere for work, show your appreciation with benefits such as childcare, healthcare or more holiday hours.

The underinsurance trap

With construction costs soaring,

THERE’S A weakness at the heart of countless UK businesses that most of them probably aren’t aware of. It’s called underinsurance.

Here’s how things stand. For a variety of reasons – such as energy costs, inflation, Covid-19 and Brexit – labour and material costs in the construction sector have rocketed recently.

Unless you’re building a house, factory or office block, that fact might have passed you by. But there’s a side-effect that everyone running a business needs to know about.

As the property’s owner, it’s your responsibility to ensure that the value listed on your insurance policy is correct.

Now, for the sake of argument, let’s say your premises suffer a fire. At the present time, it’s quite likely that the cost of rebuilding them is higher than you think –which matters when you make an insurance claim.

Say that you’re insured for £1 million, unaware that the building’s true rebuild value is now £2 million. You consequently have a shortfall of 50 per cent.

In formal language, the rebuild

value on your insurance policy is lower than the actual cost to rebuild your property.

You make a claim for £500,000, oblivious to the fact that under what’s called the Condition of Average clause, the insurer might pay out a proportionate amount –that is, no more than £250,000. Worse still, the insurer might void the policy on the grounds of misrepresentation, meaning you get nothing.

Aston Lark’s business relationship manager, Max Palmer-Jeffery, wrote bluntly about the situation in a recent blogpost for the company’s website.

“Quite simply, due to the ongoing volatility in the construction sector, any rebuild valuation that’s over a year old is almost certain to leave you underinsured today,” he concluded.

What’s the solution?

Aston Lark offers two building insurance rebuild valuation services to ensure your assets are valued correctly.

The traditional “boots on the ground” evaluation is the building

many businesses aren’t aware that they’re underinsured – an oversight that could cost them dearly if they make a claim

insurance reinstatement cost assessment, or RCA, suitable for single or multiple buildings.

RCAs are for anyone who has not had a professional valuation in 12 months and, for commercial and residential buildings, cost a minimum of £490 plus VAT, depending on the current declared value.

The alternative is a Benchmark e-valuation – a fast and affordable desk-based method introduced in 2022 in association with Barrett Corp & Harrington (BCH).

This virtual RCA costs £99 plus VAT. E-valuations, delivered within 72 hours of instruction, estimate the true reinstatement sum insured within 10 per cent accuracy of a surveyor undertaking a full survey.

Results are based on access, digital planning data, location, the latest digital mapping data, and information provided by you.

The Benchmark service is supported by some major insurers for average waiver guarantee.

In 2022, we carried out 1,923 valuations and found that 84 per cent of the clients in question were underinsured, and by an average of 57per cent. If you’ve not had your commercial property valued in the past 12 months, contact us today.

To find out more, visit:

www.astonlark.com

The huge cost of cyber crime

Why cyber insurance is your best form of recovery from a cyber-attack

WHILE a growing number of businesses and even sole traders have adequately armed themselves with specific insurance against cyber-attacks, there are many companies that remain inadequately protected from the threat and consequences of cyber crime. Whether it is the excuse of “it will never happen to us” or possibly viewing it as an extra and unnecessary expense, the number of firms uninsured and therefore more exposed, is quite staggering.

How cyber-attacks have hit and damaged high-street names

At the time of writing, March 2023, a news story broke that a long-established high street name had suffered a major data breach – a classic cyber-attack. In this case it was an information “hack” on employees rather than customers, and the press statement from the business in question clearly stated that they took cyber security seriously and an investigation was underway,

so we can only hope that the level of insurance reflects this. It’s not the first time that a “successful” cyber-attack has come to light. From reports that a major sports and leisure name recently had up to 10 million customer names and account details stolen1, to the most concerning, far-reaching data invasions on the NHS, cyber crime is a constant, rather than a rarity.

Understanding the unseen cyber-threats

The mining of personal and financial data to use as a digital ransom note is only one aspect of cyber crime. Equally common are the attacks that can render computer system hardware and software unusable. And that risk is very real. Whether you simply allow your staff to use the internet at work, have a small website for your business, keep customer and supplier records backed up on a computer, or oversee a growing network of linked laptops, there is potential for a malicious cyberattack.

The most advanced anti-virus software and crack IT teams can offer a decent level of protection against cyber crime, but over in “crime land” there are some big brains and scarily powerful forms of software attempting to weaken and invade, breaking through even the strongest defences. It’s a neverending game of cat and mouse – made worse as the perpetrators are pretty much an invisible force and the consequences can be huge in terms of expense, reputational damage control, disruption to business, legal ramifications, and a loss of trust from those directly affected.

Let’s be frank. Cyber insurance is NOT a guarantee against cyber crime happening (we only wish it were), but it does afford you and your business protection and peace of mind if there is an attack, such as the ones we’ve outlined above.

Latest research suggests that if you’re a small or medium-sized enterprise, there’s around a 50 per cent chance that you’ll experience some sort of cyber security breach2

Picture this. You’re the director of an online beauty business. It’s doing well, and you currently have an employee base of 60 and around 20,000 customers on your mailing list. And you’ve had decent press coverage for your Vegan face creams. Just as you’re ramping up for a profitable Christmas, you’re hit by a malware attack. This may be a deliberately planted software virus or possibly spyware, but you know you’ve been compromised, and Christmas isn’t looking nearly as merry or lucrative.

It’s not just the time to undo the damage and get back online, it’s the wider repercussions – which, without decent cyber insurance, you may not be able to bounce back from. For an SME, estimated costs alone could be anywhere between £35k-£65k – which is a lot of unexpected finance to find.

How to minimise the impact of a cyber-attack

Cyber insurance is not so much a weapon, but a necessary defensive shield. You may find that you need to use this in the event of a stolen mobile phone or laptop, or it could be the widespread infiltration of a large network of devices. Neither scenario is good news, but targeted insurance cover lessens the impact on all fronts.

Aston Lark’s Cyber Risk Protection insurance goes beyond cover for the calamitous possibility of that network breach; we also provide legal and PR advice should the worst happen, and cyber-awareness training, so you and your team can be as prepared as possible for an attack.

One last thing. In many reported cases of a cyber incident, it’s human error that’s the cause rather than malicious intent. So, you’ll be reassured to know we cover that as well.

Bolster your IT defences against the outcome of a cyber-attack by filling out a quote request form here or calling our cyber insurance team on 020 8633 8436.

1. JD Sports says 10 million customers hit by cyber-attack - BBC News

2. Small Business Guide: Cyber Security

How Aston Lark can help

IN AN increasingly faceless world, the people at Aston Lark care. That’s what sets them apart.

Putting the customer first has garnered the insurer more than 200,000 clients across the UK and Ireland, with a Feefo customer experience rating of 4.7 out of 5.

The company is one of the UK’s top three independent chartered insurance brokers, with 2,000-plus staff in more than 70 offices placing over £1.2 billion of premiums into the market each year.

Consequently, the scope of its expertise is enormous. What’s more, it spans all commercial sectors, with an in-house claims team on hand when you need them most.

Aston Lark’s range of solutions encompasses business insurance, personal insurance and employee benefits.

In addition, the Chartered Insurance Institute (CII) has recognised its professionalism by awarding it the coveted status of corporate Chartered Insurance Brokers.

This prestigious designation signifies that it’s committed to pursuing the highest standards, adhering to ethical good practice, and helping staff achieve professional qualifications.

The right advice for SMEs

Running a small business is always personal, so your SME insurance

should be too. That’s why Aston Lark’s team takes the time to get to know your business, to find you precisely the right cover.

Wherever you are, you’re in reach of an Aston Lark office. Its brokers are always close by for a catch-up, business meeting or simply to drop in and see how you’re getting on.

With over 12,000 SME customers in its care, the insurer is well aware there’s no off-the-shelf policy that covers small businesses properly. With that in mind, its brokers put in the hours to understand what you do and what makes your business tick.

You’ll get a dedicated account handler so you can talk to the same person every time, backed up by Aston Lark’s longstanding experience and a national reach that enables it to negotiate competitive prices.

Whatever your size and sector, its teams pride themselves on finding you the ideal policy – the “Goldilocks” insurance that’s just right. Unlike a call centre or comparison site, they care about your business and recognise the investment of blood, sweat, and tears that goes into running an SME. Conscious that many small business owners don’t work conventional nine-to-five hours, Aston Lark’s employees are on call early and late to discuss your insurance needs.

They offer a range of covers, which they’re always happy to talk through. And should you need to make a claim, they’ll make this stressful experience as easy as possible.

The company’s in-house teams will guide you through the claims process from end to end, making sure they get your business back to normal quickly and seamlessly.

For full details of its SME insurance service visit:

www.astonlark.com

With its scale and know-how, this leading insurance firm will take care of you and your business, wherever you are