How to protect risks to cashflow with insurance

Posted by 7 June, 2017 (0) Comment


This blog is about protecting cash flow, especially if those that owe money go bust.

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What if a buyer goes bust?

With the global recession and Brexit, business owners are having to consider the impact this could potentially have on their business.  What if a client goes bust?  If a company is owed significant amounts of money from clients, it is a major risk to cash flow.

Gareth came to us with these questions and more.  He knew exactly what he wanted from an insurance.   Dealing with imports he needed peace of mind that he had cover if stock went missing.  He also needed to know that his invoices were covered if products didn’t reach the consumer. We took time to completely understand Gareth’s business to a granular level.

What if they don’t want to pay?

Business Owners need confidence that they are going to get cover that matched their needs and not be sold an off the peg insurance that doesn’t quite do the job.  After negotiating with underwriters we carefully selected the options that matched Gareth’s broad requirements.

One option included protection against protracted debts or liquidations relating to companies that had been invoiced. It often helps with obtaining quicker payments, from companies that are happy to share the debt, when the risk of a default is backed by credible protection.

What are the risks when reducing risks?

Following up with a meeting to go through the small print and fully explain terms, conditions and exclusions is a must.  We tell it like it is, the good and the bad so our clients can make informed decisions.

The devil is in the detail and it is often a surprise to everyone, including us, when it is interpreted based on a particular business. It’s our duty to actually recommend protection that fits each client and the most appropriate has to meet their needs, rather than provide the dreaded false sense of security.


Wrap up; Small print can be seen as an enemy yet there’s a lot that can be learned from it. Read our blogs on the different types of policies available. I used to be surprised at the number of people that told me that they had already covered everything, then sent me documents riddled with exclusions. I now know it is a common occurrence in our sector.

Top tip; Some people find out when it’s too late.Review your debtors regulary and watch out for slow payers and avoid companies that are shown as risks on credit checks

Categories : Accountants Insurance,All Risks Insurance,Business Insurance,Company Insurance,Customer Service,Legal expenses insurance,Liability Insurance,Litigation expenses insurance Tags : , , , , , , , , , , , , , ,

No-one will sue me or blame me

Posted by 27 December, 2014 (0) Comment

Business is easier to do when people are getting on yet it pays to keep everyone happy when relationships start to falter. This article is about money, the fact that it talks when opinions differ and why it is a foreign language for some.

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I’ve had an idea…..but I can’t do it on my own


Inventors are not just stuck in sheds. Some of them are hugely creative and have big idea after big idea. I am contacted by inventors when they want to protect an idea they’ve created. Most of them are in “start-up” mode and it takes time for the income to pour in.

However, they still need services to help them lift off and it is not uncommon to reach bartering agreements or agree profit or equity shares with those that help them out. Wonderful isn’t it? In an ideal World, yes, in the real World it depends. Recently, I’ve been contacted by two different companies who both had similar issues with such agreements . They were both being taken to court when such “contracts” had gone sour, they were very loose unwritten agreements.

We can’t agree about everything


But it pays to sit down and agree the basics. The first indication that something was going wrong was the receipt of a legal document outlining a case of a service provided that hadn’t been paid for. In each case the inventor thought they had “come to an agreement” yet the complainant asserted that nothing had been written down and they expected a prompt realisation of profits, which is rare. Both inventors were upset as well as being annoyed. One was being asked for £40,000 in fees for work they had “ordered”. The other was being invoiced for £18,000 fees for time spent “assisting” the start-uo.

Even after the first legal notice was issued, the inventor contacted the person that was “owed” the £40,000 and came to another agreement. They were somewhat surprised to learn, soon after, that the complainant had obtained a judgement against them and bailiffs were chasing them for money they didn’t have. Sometimes, the courts do odd things. Launching an appeal has proved fruitless for at lease one company facing a wind up order. Their business was closed down by a judge before the appeal date arrived. It is beyond belief.

You owe me, I sue you


Eventually, the money was found yet it had been earmarked for marketing so the launch had to be delayed in one case. The debts were paid when they may not have been legally liable to pay them. They were forced to settle because they didn’t have the resources to defend themselves.

Defending yourself doesn’t have to be ridiculously costly but it does take up time. High quality legal resources have to be paid for. It’s not only about what you sign, it’s about what you agree.  Verbal agreements are often considered binding by one party and failure to defend a corner means louder voices are likely to be heard. The balance between defending and paying up doesn’t always leave defendants between a rock and a hard place. I have plenty of clients who have successfully defended  spurious allegations.

Wrap up; Contracts aren’t always big documents and verbal agreements are often taken seriously. It’s really difficult to juggle all the tasks when unexpected legal issues arise. Not to mention the upset if you don’t know where to turn.

Top tip; Do not ignore issues that are on the “too difficult list”. They have a habit of resurfacing  and investor shareholders hate that too. It is not fair but the deepest pockets usually win.

Categories : After The Event,Business Insurance,Company Insurance,Design Insurance,Domian name protection,Intellectual Property Insurance,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Patent Insurance,Trade Secret Protection,Trademark Insurance Tags : , , , , , , , , , , , , , , , ,

Advisers “advice” drops client in it

Posted by 5 October, 2013 (0) Comment

This article about how insurances with the same “brand name” can look the same to the untrained eye, how pressure to provide quotations often stresses brokers, how lucrative industries carry the highest risks, and how you can reduce them.

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No two businesses are the same


Recently I was asked for “professional insurance” by two distinctly different businesses. One business advised multinationals on which businesses they should merge or acquire, and the other helped people in the UK to buy a business by finding them and introducing the investor to the current business owner. Both thought they were in mergers and acquisitions. This is seen as a very high risk industry by underwriters, and very few insurance providers will provide cover for such a high risk area.

The first business specialised in Anglo-Chinese business relations and was introduced to me by an accountant who understood exactly what I did. The introduction was made after the business had received a quotation that amounted to 18% of their annual turnover. You might think that is ridiculous, and it is, yet I have seen solicitors charged 38% of their turnover for insurance because of the ridiculous way solicitors are made to buy insurance.

Pressure cooker environment?


In each case, there was pressure to provide documentation to 3rd parties who wanted to work with these companies, yet insisted that they had appropriate insurance cover first. This is not at all unusual, in fact, about 50% of my clients have insurance requirements imposed on them by third parties. Yet they were all able to explain why they needed it and when the deadline was. So we make time to provide real advice.

Some of those I have been able to help were initially tempted to get the first insurance they could find that “ticked the box” of those demanding evidence that they were insured. Lot’s of people tell others “my insurance costs less than yours”. Giving in to the cost saving temptation means that businesses have ticked “a box” yet not actually protected their assets, income or reputation. Insurance that isn’t fit for purpose rarely pays out. Unless you are very lucky.

It actually takes as much as 30 days to arrange some insurances, because the insurance underwriters that understand emerging risks are in such short supply. After all, it is not car insurance, which has been commoditised and is available at the click of a finger 24/7, 365 – if you have a debit card.

Why are rates so high?


When talking to business owners looking for protection we first assess their requirements and then provide them with some ballpark estimates of the annual cost of protections. We do this because we are experienced enough to have a good idea of the rates achievable, and we know that some business owners haven’t budgeted for bespoke insurance. Some are shocked at the scale of the investment and we are often explaining that the situation is nothing to do with them. So who’s fault is it?

Some sectors have suffered from enormous losses because of the lack of care, skill, or diligence of the people operating in those sectors. Once insurance companies have “taken a hiding” from a particular sector, they might withdraw. You’ve probably read about how flood insurance is in such short supply. It actually isn’t, we have plenty of underwriters who will provide cover in reputed “flood zones”. Yet the media paint a different picture, and people believe what they hear often enough.

What the media don’t report is the high earning sectors that have suffered huge losses do not have many underwriters vying for their business, even if it is unique. This means that their rates will increase because there is demand, yet not much supply. Insurers need to come clean about the issues they resolve in a sector if they are to build trust and reduce risk.

Wrap up: Even if you are in a sector that has suffered losses there is plenty you can do to achieve the most competitive rates available. The first thing is to investigate losses that have happened in the sector in the past, and then work out exactly how to reduce them, using risk management. If you are unsure how to do this contact us and we will help where we can, or point you in the right direction.

Top Tip: When thinking of diving into a new sector, always speak to a set of good advisers first because solicitors, accountants, business advisers, perhaps even insurance brokers, may have experience in the sector or, at least, are able to point you in the direction of those that do. By asking the right questions you will find out more than your challengers know. The tax predicament, propensity to litigate and insurance rates will have a bearing on the profits you are able to make in any particular line of business.

Categories : Accountants Insurance,After The Event,All Risks Insurance,Building Contractor,Business Insurance,Company Insurance,Contractors Insurance,Customer Service,Design Insurance,Domian name protection,General Requirements,Health & Safety,Intellectual Property Insurance,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Patent Insurance,Personal Insurance,Solicitors indemnity,Solicitors insurance,Trade,Trade Secret Protection,Trademark Insurance,Uncategorized Tags : , , , , , , , ,

Tailor-made insurance

Posted by 18 May, 2013 (0) Comment

This article highlights why it makes sense to review the risks a business faces, check that insurance policies are fit for purpose and what can happen if this is not undertaken regularly.

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I have this cover – what is it for?


After successfully covering something that the incumbent broker couldn’t, without too much trouble, I was invited to visit their premises, take a look around, and undertake a review. A reasonable way to reduce the time it takes to undertake a business risk assessment is to look at current insurance documentation.

Having collected the information, there was one piece missing, and I received an email to say it would be forwarded on to me as soon as it was received from the broker. At the same time the gentleman said it includes “x cover, and I don’t know what that is”. This is not unusual in my industry. A lot of people build relationships with their brokers and then buy what they recommend. Yet it appeared that the broker had recommended this particular cover, but had failed to remind the client what, or how, it actually protected them.

Does a review mean rates will increase?


When the document arrived it was pretty standard. After discussing various cover with underwriters, we got some options. The next step on such a large insurance programme (we are talking about a company who export £1.7million of high quality product to America), is to sit down again and discuss the terms and conditions of the options available to us. The rates we had obtained were 25% less than they were used to so it made sense for the Finance Director to invite us back to discuss in detail.

During this meeting I asked about previous incidents. It had previously been declared that there hadn’t been any in 5 years, apart from a mobile phone being lost. Whilst I collected information about staff, including health and safety arrangements, the Director sighed “staff, our biggest expense and liability.” I enquired how they proved to be a liability if no claims had been made and he said “we don’t have to tell them about things that aren’t insured, do we?” I ventured that they may not have to, yet insurance companies were not that kind. Insurance company requirements often mean that every issue has to be disclosed, no matter how trivial or whether it related to the cover they were providing or not. So the client regaled me with the tale of the dissatisfied employee who had threatened starting a tribunal alleging stress they were suffering was related to their work, and they had settled for £15,000 on the recommendation of their Human Resources consultant.

What do you mean we are covered?


I asked the client if they had discussed the stress related claim with their broker. “No” he replied, “we are not covered for this.” I felt it would be cruel to tell him that one of the policies he had in place would have provided him with advice on how to reduce the cost and time spent on such issues. Another may have provided cover for a legal defence and paying compensation if it were awarded. If only it had been explained to the client before the incident happened. This is because some policies only pay out if an issue is reported to an insurer as soon as it crops up.

As I said before, this is not unusual in my industry. Whenever someone tells me that they have insurance, but are unsure of what it covers, I realise that their broker has been order-taking, rather than providing an assessment of risk or any advice. What really sticks in my craw is that the previous broker had sold them a policy which wasn’t much use to them, yet by taking one of the optional extensions they would not have had to pay this £15,000 themselves So, with their current broker they invested over £100,000 and still had to fund a £15,000 claim from their own pocket.

At the last minute, the incumbent broker did try and persuade the FD that he should stay with them, and even resorted to the underhand tactic of trying to approach the insurance company I had recommended so that they could copy the work I had undertaken, and pull the rug from under us. Luckily they were not successful because we have strong relationships with underwriters and they give us exclusive terms and conditions, that order taking brokers cannot access.

The most alarming thing about this rather typical scenario is that the broker could have prevented his client from obtaining the cover he actually desired by trying this underhand tactic. The broker would have known this was the case, but was far more concerned with keeping the business than helping the client protect his.

Wrap Up: At the beginning of the process I had explained that his incumbent broker would probably try underhand tactics and it was best he didn’t tell them that we were involved in a review because it may prejudice his position if he did. He agreed that that was the case, yet when put under pressure by the incumbent, who begged for one more chance, he nearly shot himself in the foot. It happens, regrettably, all too often – yet not to us.

Top Tip: When seeking an assessment of risk, it’s important to request assistance from someone who has a reputation for looking after their clients rather than being an excellent salesperson. The hard sell is all too evident in this industry and masks the underhand tactics that too many brokers participate in, to protect their not so hard earned income.

Categories : Accountants Insurance,After The Event,All Risks Insurance,Building Contractor,Business Insurance,Company Insurance,Contractors Insurance,Customer Service,General Requirements,Health & Safety,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Personal Insurance,Solicitors indemnity,Solicitors insurance,Trade,Uncategorized Tags : , , , , , , , , , ,

Solicitors’ “silly season” is not so silly

Posted by 20 August, 2012 (0) Comment

Silly season is upon us and the PI renewal scramble has already started. Yet it isn’t so mad this year. Read on to find out if that is because of the ABS’, SRA or insurers.

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Rates Are Down

Deck of cards on a graph - Business GambleCould it be that insurance companies are being more amenable because there are now fewer firms looking for specialist solicitors indemnity? Their market is shrinking. Perhaps firms set up as ABS’ have found a better way of meeting SRA requirements? Perhaps new regulations for COLPs and COFAs have lead to fewer claims.

It’s more likely that the new entrance into this specialist market have increased competition. This could lead to short term gains and long term pains, like Quinn.

Are New Entrants Good News?

There is a certain amount of irony here. Over the last few years insurance companies have not accepted proposals from solicitors with shaky finances. Yet solicitors will accept quotations from insurance companies they’ve never heard of, with claims departments that may as well be in Timbuktu.

Solicitors seem happy to rely on the fact that SRA approved the new entrants, and brokers are happy to offer the quotations if it secures them a client or renewal.

Memories must be extremely short because the SRA approved Quinn too, and brokers continued to offer Quinn quotations days before they went bust.

Dig A Little Deeper

It’s a good time for solicitors to take their pick from the available insurance companies. I can still see the logic in getting the best rates, reducing costs and ticking the SRA box.

Now the market is competitive again it would be prudent to delve a little deeper into insurance company service. Does the policy provide the right cover – yes. Will you get assistance from the claims department – probably. Will the way the claim is handled meet your expectations… who knows!

Wrap up: COLPs and COFAs – love the role or hate it, they are the people that can implement lessons that businesses have learnt and solicitors have been deprived of. The identification of near misses and risks that solicitors were previously unaware of, will help practises evolve profitably.

Top tip: COLPs and COFAs can reduce costs and increase profits. Undertaking the role properly will mean both can be achieved independently of each other.

Who to share this with: Managing Partners, COLPs and COFAs.

Categories : Accountants Insurance,After The Event,All Risks Insurance,Building Contractor,Business Insurance,Company Insurance,Contractors Insurance,Customer Service,General Requirements,Health & Safety,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Personal Insurance,Solicitors indemnity,Solicitors insurance,Trade,Uncategorized Tags : , , , , , , , , , , , , ,

When complainants get tough, the tough respond cordially

Posted by 14 August, 2012 (0) Comment

Business owners dread a call from an unhappy client. This post is about what happens when a meeting causes panic. Read on to find out who is on the receiving end, why it happens, and how to avoid setting dangerous precedents.

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I’ve just had my business arse kicked! Am I covered?


Computer keyboard - Press the "any" keyMike phones me at 4pm on a Monday. It’s immediately clear that he’s flustered. It transpires he has just  left a meeting with a client for whom he has been providing IT services for nearly a year. “I feel like I’ve had a good kicking. We’ve been accused of making mistakes and fraud. I really need to know – am I covered for this, especially if they take action?”

This is not an everyday occurrence in my world, but it happens with enough frequency that we are used to it. We plan for it by making ourselves available every day because we want to help when it’s most needed. Mike was “covered” and I let him know immediately. He wanted a good night’s sleep, and the finer points can be ironed out when full details are known.

So what are the chances of keeping everyone happy all of the time?


I remember when Mike and I first sat down 3 years ago. His business was, and still is, growing rapidly, and clients expectations change all the time too. The main concern at the time was this type of issue, because IT changes as quick as customer expectations. The unfounded allegation of fraud was the result of a “competitor” getting involved.

It is a real blow when a client becomes unhappy. Yet this particular complainant had been egged on by another company, who probably wanted to usurp Mike. The competition went as far as producing a damming report, with a host of allegations that the client could wave in front of Mike, which the client did, with relish.

Apart from shock and horror, are there other issues?


Time. It takes time to answer any complaint. Time should be taken to avoid making the matter worse. What is vital is to take a massive deep breath, work out what has actually happened and make sure communications are clear.

This has since been achieved, and the angry party have calmed down, after they received a considered response. Even so, complainants make unrealistic demands when they’re angry and meetings without agendas set a dangerous precedent.

Wrap up: When a business is growing, learn to expect the unexpected, and plan for it. Keep in mind clients expectations change all the time too, and giving in to unrealistic demands of angry clients is not the most sensible response. Take time out to consider the situation from all angles and ensure all outgoing communications are cordial.

Top tip: In all cases, insurance companies must be kept fully informed of all progress and have lot’s of experience in what works and what doesn’t. It makes sense to lean on them rather than trying to avoid the issue or worry about unlikely premium increases.

Share this with: business owners, service providers, IT people, contractors, and anyone else who gets involved in providing a service to the demanding.

Names have been changed to protect the truly innocent.

Categories : Accountants Insurance,After The Event,All Risks Insurance,Business Insurance,Company Insurance,Customer Service,General Requirements,Legal expenses insurance,Liability Insurance,Litigation expenses insurance,Personal Insurance,Solicitors indemnity,Solicitors insurance,Trade,Uncategorized Tags : , , , , , , , , , , , , , , , , , ,