Where to begin with the state of the glazing and insurance industries as we head into the fourth quarter of 2020? These are unusual times to say the least. The COVID-19 pandemic continues to disrupt nearly every facet of our lives both personally and professionally and its impact on the glazing and insurance sectors has been unmistakeable.
The national lockdown measures first implemented in March saw home improvement and domestic installation work across the country come to a standstill. While many business tasks can be performed from home, it simply isn’t possible to install a window or door remotely.
Installers naturally breathed a sigh of relief in May when lockdown measures were relaxed. After months of enforced hiatus, installation work in domestic dwellings was able to restart again albeit with enhanced safety measures in place such as those outlined in FENSA’s coronavirus safe installation guides.
Since then the industry has rallied, with demand for work in many places outpacing supply. This has been driven in part by installation work deferred from contracts agreed pre-lockdown, yet also by an influx of new work as homeowners seek to invest in and improve the quality of homes to which they have been largely confined for several months.
The result was huge volumes of glazing installations across July and August. Obviously this was great news for the industry, however there are signs we aren’t out of the woods yet.
Last month the UK officially entered recession and next month will see the Government’s furlough scheme draw to a close (though last week the Chancellor announced the new Job Support Scheme and an extension to the Self Employment Income Support Scheme). The recent appearance of new COVID-19 hotspots and the spectre of renewed lockdown measures in the wake of increasing case numbers have only contributed to the sense of uncertainty faced by many businesses.
If there is one word insurers most certainly do not like, it’s uncertainty. The effects and outcomes of the coronavirus pandemic have sent shockwaves throughout the insurance industry. Such has been the disruption that the extent of the consequences in some sectors still remains unclear.
As an example, take Business Interruption Insurance. Insurers have (perhaps understandably) received record numbers of Business Interruption claims as the pandemic progressed. They have contested many of these in light of the unusual circumstances surrounding the claims submitted to them. An FCA-spearheaded test case was concluded in the High Court on July 30 in an attempt to break the deadlock in this market.
Judgment was subsequently made on the September 15 with significant reference to the technical specifics of policy wordings being at the heart of the matter. Some insurers have been instructed to pay whilst others have not – and those that have been instructed to pay will likely appeal the judgment of the case. It is doubtless set to run on and whatever the final outcome, it will in all probability have huge implications for the transaction of insurance business in a post-COVID world.
It’s a fine balance to maintain. The more difficult it becomes for insurance of a particular type to be written, the less availability there will be. As supply diminishes, demand increases and premiums go up accordingly. Make it too difficult and insurers will simply exit that particular market altogether – they are businesses too and need to find it worthwhile to trade.
Ultimately it would defeat the objective entirely if as a result of the final High Court judgement outcome all insurers exit the Business Interruption sector. It will be a challenge to reach a judgement acceptable to all concerned.
The fundamental principle of insurance is risk: managing, controlling and monitoring it are the key functions of a responsible insurance business. Against the backdrop of an increasingly regulated trading environment, it is more important than ever that insurers effectively manage the risks they take on.
This brings us to Installsure and the type of insurance we specialise in: Insurance Backed Guarantees (IBGs). IBGs provide protection against installation businesses becoming insolvent. Unsurprisingly the national lockdown measures were a source of considerable concern to IBG providers.
It’s easy to understand why: if glazing companies can’t install windows, IBG providers are unable to collect revenue. What's more, not being able to install would mean financial losses for businesses and a likely increase in liquidations. This would expose the underlying insurers to the very real risks of increased claims and settlements.
So what can insurers do to control this? Restricting some product lines temporarily was an inevitable outcome, particularly in respect of deposits which represent significant (though short term) spikes in exposure.
Another necessary measure was increased scrutiny of new businesses applying to register for IBG schemes. In a world impacted by COVID-19 restrictions, many businesses have experienced tougher trading conditions. Insurers have a responsibility to take this into account as they too are running a business.
There's no escaping that the last six months have been a challenging period. At Installsure we continue to adapt to the new landscape and focus on providing insurance services to our clients at competitive rates while managing our risks responsibly. We realise that the availability and turnaround time of some of our products and services have been adversely affected this year. These are challenges faced not just across the IBG sector but the insurance industry as a whole.
The good news is we’ve been working closely with our insurance partners to ensure Installsure clients and policyholders experience as little disruption as possible. We are still committed to keeping our premiums competitive and to providing the quality service and support our clients have come to expect. Notwithstanding our own challenges with remote working and unprecedented levels of claims queries!
And despite the increased scrutiny now required to assess new applications, we are focussed on turning around new Installsure IBG scheme applications with minimum delay to assist businesses as best we can.
We’re learning more with each new week. Our team has been able to adapt our forecasting and pricing models to accommodate the new insurance environment. Similarly insights have fed into the development of our products so that we can best deliver for our clients against a backdrop of almost unprecedented upheaval.
So what lies ahead? We’ll be keeping a close eye on the insurance industry and the economy over the months to come. Let us not forget that the glazing sector has shown itself to be both resilient and resourceful. Coupled with the support of an adaptable and innovative insurance sector, this should be a cause for optimism regardless of what bumps in the road lurk around the corner.