By Ashwin Mistry
THE current uncertainty and the likelihood of a no-deal Brexit are causing real fear among firms involved in the packaging industry.
Indeed, many firms are putting off decisions affecting investment and the recruitment of staff. Worryingly a recent survey from the Federation of Small Businesses (FSB) revealed that only one in seven (14 per cent) of small businesses have started planning for a no-deal conclusion to Brexit.
What’s more, businesses that stockpile goods in preparation for potential Brexit-related disruptions are leaving themselves at risk of being underinsured. Uncertainty about what will happen when the UK leaves the EU in March means large firms as well as SME businesses are stocking extra resources. Majestic Wine, has been stocking up to an extra £8m-worth of wine in its UK warehouses as a contingency against a no-deal Brexit. There have also been reports of increased demand for cold-storage space in food warehouses.
So what are the insurance implications for those firms involved in the packaging industry when in comes to Brexit and what can they do to ensure they are properly protected?
1. The continued currency fluctuations causing a fall in the value of the pound may make it more expensive to import goods such as replacement equipment, plant or machinery. This may result in a firm being underinsured, which could mean an additional premium, different policy terms or a reduction in a claim payment. So its vital to contact your insurance broker to ensure your business is properly covered.
2. Businesses that stockpile goods in preparation for potential Brexit-related disruptions are leaving themselves at risk of being underinsured. These firms should inform their broker now about the extra stock instead of waiting for their next renewal to ensure they are properly covered.
3. Firms should consider how the risks to their business might change whatever the Brexit outcome including areas such as cyber risk and data protection.
4. Get correct and regular valuations and base the sums insured for buildings on the cost of rebuilding and not the market value.
5. Consider that the affect of the planned EU exit might have an impact on the cost and the delivery time for replacement machinery, plant or other contents if a supplier is based in the EU, which will need to be factored in to the amounts insured.
6. Review any indemnity period for a business interruption cover. Firms should consider that 24 months is likely to be the minimum period needed for a business to fully recover its trading level and rebuild its customer base. Check that business interruption indemnity periods and other standard policy limits are sufficient as well as the basis on which the sum insured is to be calculated.
7. Make sure that the correct levels of insurance are in place now, rather than waiting for renewal, along with considering any increased expenses to import goods from the EU that might impact the cost of a claim.
8. An economic downturn resulting from the Brexit outcome could result in an increase in business crime. So firms should prepare now to combat against small theft, burglary, extortion, computer fraud, and robbery.
9. Speak with your insurance broker who can help you navigate the issues that Brexit may pose and ensure you and your business is properly protected.
Ashwin Mistry OBE ACII is the chairman at chartered broker BHIB Insurance Brokers. Find out more about BHIB Insurance Brokers at www.bhibinsurance.co.uk