Businesses should embrace benefits of business insurance, IoD urges

The Institute of Directors (IoD) has urged business leaders to stop seeing business insurance as a "grudge purchase" and embrace the benefits it offers.

The organisation, which is the UK’s longest running body offering support and advice for professional leaders, published a report on Tuesday (3 November) which outlined why boards should take an active interest in their company's insurance programs.

Its Critical Business Insurance guide for business leaders focused on four specific reasons why business insurance matters. The first of which is that in the modern workplace, risks - including cyber attacks and supply chain disruption - are becoming more difficult to predict, which makes the insurance safety net all the more important.

The second reason why business leaders need to take a serious interest in the company's insurance is that the policies are among the largest contracts an organisation will enter into. Those at the head of the company, therefore, should be heavily involved in selecting or renewing a policy.

Third on the list of reasons given in the report surround the introduction of the new UK Insurance Act, which comes into force next August. This will provide greater protection for commercial policyholders, but it will also place greater obligations on them.

And finally, the IoD stresses that business insurance is actually a key tool for underpinning and enabling growth, so companies must be sure to get the right one.

Simon Walker, director general at the IoD, said in a statement accompanying the release of the report that business leaders see insurance as an expense and are often focused on finding the cheapest price possible, but they ought to focus on getting a policy that meets their needs.

He explained: "The size and complexity of insurance contracts alone means they demand board-level scrutiny to ensure that cover is fit for purpose and that it also represents good value."