Under the Act, company senior management teams will be required to disclose knowledge of what ‘the insured knows’ to their insurance providers, Aon UK said. Additionally, firms will need to provide information of knowledge held by ‘any other person’, which Aon said was open to interpretation but would likely cover agents and persons covered by the insurance.
In its Food and Drink Market Update 2016, Aon also explained that manufacturers would need to avoid data dumping – ie providing large volumes of information to insurers without sufficient structure. All disclosures would need to be accessible and clearly presented, structured, indexed and sign-posted.
New legislation
“This new legislation aims to rebalance fairness for both parties of an insurance contract, removing the current draconian rules around disclosure and representation non-compliance, in many cases,” said Guy Malyon, head of UK broking at Aon Risk Services.
“However, these are being replaced by a new duty to ‘make a fair presentation of your risk’, which means companies should work closely with their brokers to ensure they are complying with the law in this regard.”
The report found that product recalls and crisis management had become increasingly important within food manufacturers’ insurance policies.
In light of the recent UK-wide flooding problems, it warned that flood-prone premises might not receive access to the same affordable insurance that homeowners enjoyed. It suggested those in “particularly threatened” locations could expect further loading of their premiums.
Fires and arson
The report also highlighted how electrical fires and arson were a persistent issue for the industry throughout 2015.
It said that importance of robust business continuity planning was demonstrated by fruit juice supplier David Berryman, which last year was able to supply customers just two days after its factory burned to the ground. According to Aon, David Berryman’s flexible supply chain ensured that a collection of contract manufacturers were able to step in and replicate its production.
Overall, property accounted for 34.5% of the food and drink sector’s overall insurance premium spend in 2014, dwarfing its budget for employers’ liability (15.3%) and healthcare and benefits (18.4%).
Don't miss our photogallery charting fires affecting food and drink manufacturing firms last year.