Brokers develop close working relationships with insurers to secure the right cover to suit the needs of both businesses and individuals. These established relationships with insurers enable them to access cover that aims to protect their client’s needs at the best available price.
Brokers are also experts on the new and emerging risks their clients face. Legislation, technological innovation, and regulation are all closely monitored to provide the most accurate, relevant, and up-to-date insurance advice. The risks presented by cyber-crime are well known now, but the scale of this problem has grown significantly in the construction industry over the last few years, so the need for protection has never been greater.
Just a few years ago, cyber was an emerging risk in the construction market and take-up of this kind of protection was widely viewed as an optional extra, but this situation has changed. Brokers have been able to monitor how the rapid growth of cyber risk has disrupted the construction firms and advise them how best to protect themselves. The scale of this risk differs depending on the size of firm; smaller firms without an in-house IT department will need different support to larger firms who are more likely to have their own IT security strategy.
The exponential growth of cybercrime is the latest area brokers are increasingly asked to provide advice on. Cyber risk is a fast-moving, constantly evolving problem for businesses, including the construction sector. A Forrester survey (January 2020) revealed that more than 75% of respondents in the construction, engineering, and infrastructure industries had experienced a cyber-incident within the previous 12 months.
Cyber has drawn comparisons to Directors’ and Officers’ insurance, which was once viewed as a non-essential cover and is now widely purchased. There’s little doubt that the changing perception of D&O was influenced by financial crises and corporate scandals, as much as rigorous corporate regulation.
A client received a valid email providing bank details to pay one of their providers. Shortly after receiving the first email, the client received a second updated email that looked identical to the first, which claimed the first was sent in error and provided a second set of “updated” bank details. The second email was a phishing email that looked exactly like the first but with minor differences in the email address that went unnoticed, so the client proceeded to pay using the “updated” bank details. This simple incident resulted in the client paying £72k to cybercriminals.
Neon Mavromatis, Managing Director, Construction, said, “There are many examples that show cybercrime is a rapidly growing risk within the construction industry, but knowledge of that risk is still relatively low. We are seeing more examples of claims in this area, so we’re fully aware of the impact it can have on a client’s balance sheets and their company reputation.”
Brokers understand the need to keep ahead of emerging risks by working with flexible specialist partners such as Lloyd’s syndicates, who can provide agile, bespoke cover for the widest range of risks that traditional insurers don’t always cover.
Insurance can be complicated, so brokers aim to simplify this process. An account manager will conduct a review of your insurance needs both during the year and at renewal to fully understand any changes that might have occurred during the year. Following this review, we will evaluate your insurance needs and outline a proposal in a concise report. In the event of a loss, your broker will coordinate the claims process through to completion, coordinating all the required paperwork including detailed inventories.
A broker works in partnership with the client to protect them against the constantly changing risk landscape.
Kerry London is authorised and regulated by the Financial Conduct Authority. The company is a leading UK independent and Lloyd’s accredited broker, which means that we work with a wide range of niche and major insurers.
This note is not intended to give legal or financial advice, and, accordingly, it should not be relied upon for such or regarded as a comprehensive statement of the law and/or market practice in this area. In preparing this note, we have relied on information sourced from third parties, and we make no claims as to the completeness or accuracy of the information contained herein. You should not act upon information in this bulletin nor determine not to act without first seeking specific legal and/or specialist advice. We and our officers, employees or agents shall not be responsible for any loss whatsoever arising from the recipient’s reliance upon any information we provide herein and exclude liability for the content to the fullest extent permitted by law.