A beginner’s guide to business interruption insurance

A beginner’s guide to business interruption insurance

If you think business interruption insurance is confusing, you’re not alone. IUA Senior Underwriter Daniel Hrycko agreed before he started underwriting with IUA.

Daniel explains, that business interruption insurance – especially when sold as a stand-alone policy rather than as part of a business pack or industrial special risks insurance policy – is a lot simpler than it first appears.

The complex simplified

Daniel joined IUA in January 2020 (after previously working as a property underwriter at Mansions of Australia, Pen Underwriting and Allianz), says the use of financial information to assess losses in business interruption claims contributes to its reputation as a complex area of insurance.

“When speaking to brokers about business interruption insurance, you can almost hear them cringe. When they think of business interruption they think of calculations, spreadsheets and financials and it’s true that those things are relevant, but all we need is the most recent profit and loss statement or business turnover to get the underwriting process started,” he says.

Daniel adds that the word ‘turnover’ can mean different things in different business sectors. “It could be sales, income or revenue, essentially, it’s just what money the business was making. Provide that information and we have a place to start,” he adds.

Daniel explains that IUA’s underwriters can use the profit information, along with the business sector the client operates in, to estimate their rate of gross profit (the measure used to calculate business interruption claims) based on their knowledge of other businesses in the same sector.

In the case of new businesses without any trading history, financial information can be difficult to provide, but Daniel explains that estimates can be made based on industry knowledge, and adjustments can be made mid-term if the client is under or over-insured.

Making it easier

Unlike business interruption insurance sold as part of a business pack or industrial special risks insurance policy, stand-alone business interruption insurance doesn’t have an average/underinsurance clause – instead the sum insured is set and known upfront. “It’s just another way of making it simpler,” Daniel says.

IUA also provides brokers with an easy-to-understand worksheet that helps them work with their clients to accurately assess their sum insured.

He adds that the IUA Interruption Insurance Policy also has no excesses or waiting periods, and indemnity periods can be flexible, ranging from 26 to 156 weeks.

Help is just a phone call away

Daniel says that if brokers don’t know where to start, the easiest thing to do is simply pick up the phone and call one of IUA’s underwriters.

“If you’re confused, give us a call. Don’t feel that it’s too hard, we’re happy to talk through the process and options.”

For more information about IUA’s specialist business interruption insurance cover please visit our website or call us on 02 9307 6659.

Miramar Underwriting Agency Pty Ltd t/as Interruption Underwriting Agencies Pty Ltd (‘IUA’) acts under a binding authority as agent for certain underwriters at Lloyd’s, the insurer of the product.