BusinessBusiness RecoveryCompanies at risk from insurance costs

Companies at risk from insurance costs

Hundreds of companies are facing insolvency as risk-wary insurance companies are hiking up fees and even refusing to insure certain sectors.

Link: SMEs face massive insurance hike

According to Begbies Traynor partner Nick Hood, the inability to get insurance is bound to lead to a rise in insolvencies. He said: ‘Companies will have to stop trading because they cannot get insurance.’

Jamie Smith, business recovery partner at Deloitte & Touche added the substantial increase in insurance was due to problems insurance companiesthemselves were having because of the difficulties in the economy.

The British Insurance Brokers Association, warned that business sectors where staff are at a high risk of exposure, could close down because they are unable to get employees liability cover.

The BIBA also said companies in sectors such as construction, courierand mining are either going out of business or operating illegally withoutinsurance because of the problem.

Experts believe that in the current economic climate, the rise in premiumsalone would be enough to drive weaker companies out of business.

Jeremy Willmont of Moore Stephens said: ‘If the cost is substantial, it could be the final nail in the coffin for companies that are struggling.’

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