Protecting your business against fire, floods and cyber attack

November 1, 2018

Joel Marks, co-founder of Hoults Yard-based Cheviot Insured, reflects on the changing nature of insurance and reveals why it’s essential business owners address risk in both their organisation’s tangible and non-tangible assets

When and why was Cheviot Insured established?
I’m a South African, who worked in the City and then moved to Edinburgh to run Scottish Widows’ £17 billion pension fund. I came to the North East as my wife is from the region.

I’d developed a business plan for a fund management business and showed it to Charlie Hoult, who I knew from our children attending the same school. He’s very interested in digital business and the international scalability offered by the internet. We linked with John Baty, another seasoned financial services professional, and worked out that there’s equally a great opportunity for the personal service aspect of insurance broking. For corporate and scale-up firms in the North East, we believed there was a huge gap in the market for consultative insurance support. So it’s proved to be true.

Growth has been very rapid and we have a platform to expand both the personal approach and up-coming online partnerships.

What services do you offer?
Cheviot Insured specialises in advising local growth firms on all their commercial insurance needs – be it their property, fleet, professional indemnity or cyber insurance. There’s a great deal of complexity in owner-managed firms, whether their factory equipment, staff cover or product liabilities.

We look after everyone from chocolate factories to property portfolios, hauliers to software companies. Our approach is very much consultative and we have found that there is a real demand from our clients for face-to-face advice. SME businesses have largely been shunted off to call centres by the big national insurance brokers and we have filled the gap.

Tell me about the team and its expertise…
The team worked together for many years at a large national firm owned by AXA. They have expertise of working with companies such as The Port of Tyne, which is an extremely complex organisation. John has taken this expertise and uses it now to advise our clients, who wouldn’t normally get access to this level of detail and review. We’re bringing expertise that sets better cover, with better underwriters and still saves cost! The team wanted to work in a more entrepreneurial firm which had the ambition to grow and offer a more stimulating environment. We’re based at Hoults Yard, which offers this environment – plus, everyone can even bring their dog to work!

It says on your website that you provide ‘intelligence and rigour’. What do you mean by this?
I’ve learned that in insurance everything is about understanding the risks involved, and to understand everything that the small print tries to exclude. John is a master of trawling through policy documents to ensure that the correct policies are in place. He also has built up excellent relationships with the underwriters so he can explain to them what the nature of the risk is. This ensures that premiums can be reduced because the insurer is comfortable with what they are taking on. An online tick box quote engine can’t achieve this.

With this edition of North East Times focusing on the built environment, what do businesses need to consider when insuring their commercial property?Insurance can be seen as a grudge purchase so the temptation is to cut corners to save on the premiums. But if there is a fire or flood, and the wrong information has been submitted to the insurance company, the results could be catastrophic for the property owner.

What are the main insurance pitfalls when insuring commercial property and how does Cheviot Insured help avoid these?
Our job is to accurately calculate the business interruption profits and the buildings sums insured, and importantly to ensure that things like the fire alarms or sprinklers installed match the wording in the policy document small print.

At Hoults Yard, as a client project, John was able to significantly cut the premiums by giving advice on how changing the mix and type of tenant would make insuring the building far more attractive to insurers. A welding business is rated as far more risky than a digital media company – so some curating and consolidating of different tenants in different buildings saved a fortune. Hoults Yard is now viewed as being a very attractive risk to insure.

What are the main consequences of not having the adequate cover or submitting inaccurate and relevant information?
If, for example, the policy small print required for sprinklers to be installed in a building and they were not, then the insurer could throw out a claim if the building burned down. One client had previous cover to replace his factory production line at today’s value. If that ran for several years, he’d have saved a few thousand pounds premium, but in a claim, the insurer would have paid out a reduced claim, which wouldn’t cover ‘as new’, probably meaning a claim, like a fire, would have made it unaffordable to get a firm back on its feet.

It’s not just physical assets Cheviot Insured deals in – the company is also very active in cyber insurance. What does this comprise?

Cyber insurance is a fast-developing area where we have a lot of expertise. We have held a few conferences with our client ITPS, which has introduced a Cyber Essentials package for its clients.

The cyber insurance we provide complements the service ITPS offers to get companies prepared and protected to avoid cyber-attacks. We are seeing increasing demand for this peace-of-mind solution.

The media is full of stories about major cyber security breaches – from Facebook to the NHS. As hackers seem to get more sophisticated, how has this impacted the service Cheviot Insured offers?
The high-profile breaches reported in the media have highlighted the real risk that our clients and all businesses face from cyber criminals. We have had to deal with cases of email phishing, ransomware, hacking and in one case a threat of a total shut down of the IT system. We know of firms that have paid out £100,000, either in ransom or to reinstate kit that was hacked.

How does Cheviot Insured ensure a company has the adequate cyber cover?
John will visit either the IT director or managing director and have a detailed discussion about their systems and controls already in place. We will, on occasion, bring the underwriter to meet the company so that they better understand the risk.

We will prepare a report giving our recommendations of areas where controls can be improved and what cyber cover is needed. John will then source cover which offers the best protection at the lowest possible cost.

What are the main pitfalls for businesses in this area and what are the consequences for not being prepared for a breach in their cyber security?
We recently held a seminar where the underwriter from AIG gave the audience a few war stories of actual cases they had had to deal with. It was a real wake-up call for many in the audience.

If the correct cover is in place then access to forensic experts, IT specialists, legal and PR consultants is available. They will ensure that the effects of the cyber attack are minimised.

If cover is not in place then a cyber-attack can result in the company going out of business.

Cheviot Insured

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