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With Sterling in a Tailspin, Should Brokers Be Warning About Sums Insured?

With Sterling in a Tailspin, Should Brokers Be Warning About Sums Insured?

The weak pound may be good news for UK exporters but for firms that use parts, equipment and raw materials from abroad to make their products – business is getting much tougher. What’s more, the government’s caginess about what the terms of ‘Brexit’ will be may cause the value of sterling to sink further in the coming months.

One effect of this downward trend is that firms that bought parts or materials from overseas when the pound was stronger will find it more costly to replace them if, say, they’re damaged or stolen.

Furthermore, since UK insurers normally arrange cover in sterling, a payout to a business making an insurance claim in these circumstances may fall short of what they need to meet their losses.

This change in fortune, however, doesn’t just affect UK-based companies that rely on overseas supplies. Businesses located abroad that have to insure their liabilities to a limit set out in another currency may need to raise that threshold in sterling to cushion against more currency shifts.

With two years of tough negotiations with the EU still to come, sterling is in for some turbulent times. So if they aren’t doing so already, insurance brokers need to warn clients at risk to check – and keep checking – the value of their sums insured so they stay fully protected.

If you need help with assessing the adequacy of your sums insured, please contact your local office:

London:  0207 280 3450 
Cranleigh: 01483 274792
Leamington:

01926 420 555

Spalding: 01775 716570

 

 

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