A r e y o u p r e p a r e d ?

Unforeseen Risks

LARK FINANCIAL INSTITUTIONSISSUE 5

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Welcome to our new digital edition of LarkFI.

Firstly, I’d like to say how grateful I am to all of the authors for sharing their insights with us. Within the publication, every author shows how varied the

Financial Institutions (FI) world is and how important it is that we effectively protect our people and businesses.

We kick off our first edition in 2016 reviewing the impending regulation changes that will impact many organisations, including Financial Institutions. Understanding the importance and potential impact these may have on our FI clients from an insurance perspective is something we take very seriously and I know the team are talking to their clients about these changes.

Following on the theme of ‘Unforeseen risks’, Martin in our FI division talks about disaster recovery planning and shares a case study with us that illustrates the importance of implementing the recovery plan at the time of a crisis.

With the ‘Digital Age’ fully upon us, we move on to an article from Andrew Yates CEO of Artesian, who explains how embracing the social age can help evolve and improve the conversations between clients.

Keeping with the digital theme, Mark Child from Kingston Smith has kindly put some insight together into the dangers around cyber threats. He makes a truly compelling case for why all businesses, no matter their size or industry, should have robust security procedures to sit alongside strong insurance policies.

We round off this edition with an article from Martin Camp about the risks of underinsurance for financial institutions, we also hear about the great work Lark are doing as a business to support emerging talent in the world of music. Samantha Mistry from our Employee Benefits division makes group critical illness cover simple and, lastly, we get to know Eloise a little bit better.

I hope you find our first edition of LarkFI in 2016 informative and interesting, we always love to hear your feedback so if you have time please click on our survey link that contains a couple of quick questions.

I look forward to speaking with you more in 2016.

Mark Woodward

Commercial Director

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Regulation

The UnexpectedW H Y i t ’ s s o I M P O R TA N T t o h a v e a R O B U S T a n d F U L LY- T E S T E D D i s a s t e r R e c o v e r y P l a n .

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Cyber AttackM a r k C h i l d , P a r t n e r a t K i n g s t o n S m i t h C o n s u l t i n g L L P, t a l k s t o u s a b o u t h o w w e c a n h e a d o f f t h e t h r e a t p o s e d b y C y b e r a t t a c k s .

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Lark MusicH e a r f r o m o u r L AT E S T R o y a l C o l l e g e o f M u s i c S c h o l a r .

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A L L y o u N E E D t o k n o w a b o u t t h e u n f o r e s e e n c o n s e q u e n c e s o f r e c e n t r e g u l a t i o n c h a n g e s .

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The Social AgeA n d r e w Ya t e s , C E O a n d F o u n d e r o f A r t e s i a n S o l u t i o n s , t a l k s t o u s a b o u t t h e i m p o r t a n c e o f e n g a g i n g c l i e n t s o n a l l f r o n t s .

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Undervalued?A l l y o u N E E D t o K N O W a b o u tt h e r i s k s o f u n d e r i n s u r a n c e .

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Our PeopleH e a r f r o m E l o i s e E l l i s , N e w B u s i n e s s D e v e l o p m e n t E x e c u t i v e f r o m o u r L a r k F I d i v i s i o n .

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In June 2015, the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) announced

their coming together to improve individual accountability within the banking sector.

To achieve this, the FCA & PRA have developed three different guidelines which will monitor the activities carried out by those within the banking sector. This includes the bonuses which are received by building societies, banks and PRA designated firms.

The new Conduct Rules came into force on 7th March 2016 and firms will also be given a year after that date to prepare for the implementation of the rules, which will affect all banking sector staff the following year.

Eloise Ellis, New Business Development Executive at Lark, highlights that “…with the new guidelines in force, it is key to ensure that your insurance policies, such as Key Person Cover and Director & Officer Cover, are competent enough to support the regulation and even cover the cost of investigation.”

Details of the guidelines can be found here, but they include:

The Senior Manager Regime focuses on staff that have been pre-approved and hold key roles and responsibilities within their firm.

• It will ensure that staff in senior positions are completely accountable.

• Firms will need to set out and allocate the roles of these staff before the regulation is put in place.

CERTIFICATION REGIME

• This regime will apply to all staff who are not pre-approved. They still leave the customer and the firm at risk as they offer advice to customers on investment, etc.

• It will also apply when hiring new, safe and re-assessing current staff.

CONDUCT RULES

• These rulings act as a basic standard behavioural conduct for staff that fall under both the Senior Managers Regime and the Certification Regime. A year after the initial launch of the three sets of regulations, the Conduct Rules will be applicable to all staff operating within the banking sector.

Back in 2012, the European commission released their proposal to harmonise data protection guidelines across the

EU with one single law. With an increase in social networks and cloud computing, it has become necessary to review the existing data protection guidelines.

A common policy such as General Data Protection Regulation (GDPR) will allow businesses to alleviate the data minefield they face when dealing across multiple EU countries, as many have their own privacy laws and regulations.

Current guidelines are only applicable to businesses that operate within the EU, whereas the new proposal will extend to organisations outside of the EU where they are dealing with personal information of EU residents. In preparation, many multinational firms will be required to appoint independent

data protection officers. These officers will be responsible for enforcing the regulation within their firms, as well as understanding the organisations, IT processes, data security and ongoing governance.

Many businesses deal with personal data on a daily basis; this can range from bank details, personal postal and email addresses, medical information and social networking posts. It will become priority for such organisations to review their data protection practices to avoid the potential fines.

With the implementation of GDPR approaching and enforcement potentially coming into place at the end of 2017, many financial institutions will need to understand and assess the potential operational impacts of GDPR and ensure that they comply with the new laws within the two-year grace period.

One area of assessment should be the company’s cyber insurance and risk management programme. Cyber insurance cover can support businesses in the event of a cyber-attack or data breach. Currently, it is not a legal obligation to notify customers of a

data breach; within the new GDPR guidelines it will become a requirement for all businesses to notify the public and customers of a breach no matter how big or small.

An element of cyber insurance is to cover businesses against the cost of notifying the public and customers of a data breach. These costs could include employing a PR agency to manage public communications, arranging external training for staff to speak with affected customers or arranging crisis management services.

It is important for businesses to understand these potential costs when dealing with a breach and review their insurance cover accordingly. It is not a time for a lengthy conversation with your broker or insurer about the amount of cover or exclusions in the policy. The quicker a business can react, the more efficiently it can mitigate any reputational damage and reduce costs.

For a complimentary review or discussion about your cyber and risk management programme, please do not hesitate to contact one of our Financial Institution experts who will be happy to help.

A L L y o u N E E D t o k n o w a b o u t t h e u n f o r e s e e n c o n s e q u e n c e s o f r e c e n t r e g u l a t i o n c h a n g e s .

Senior ManagersRegime

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THE INSURANCE ACT 2015 WILL COME INTO EFFECT THROUGHOUT THE UK IN 2016.

The Insurance Act 2015, which applies to all classes of non-consumer insurance and reinsurance, comes into effect on 12 August 2016. Bringing into force the Third Parties (Rights against Insurers) Act, with minor corrections, it represents a significant change to the legal framework of insurance contracts, which has been untouched since the Marine Insurance Act 1906.

THE KEY PROVISIONS OF THE ACT ARE AS FOLLOWS:

The insured will be under a new duty of fair presentation, replacing the general obligation to disclose all material facts. The insured will have to disclose every material circumstance that he or she knows or ought to know, or sufficient information to put a prudent insurer on notice that it needs to make further enquiries to reveal the material circumstances. Currently, insurers are not obliged to make further enquiries and can rely totally on what is disclosed to them. This applies to disclosure before the contract is concluded, for new contracts and renewals, as well as mid-term variations.

Warranties are to be treated as suspensive conditions, meaning that an insurer’s liability will only be suspended during a period of breach and a breach of warranty will no longer automatically terminate the policy. The breach of the warranty must have some bearing on the actual loss by increasing the risk of the loss occurring.

New proportionate remedies are available to insurers following a breach of the new duty of fair presentation. For example, where a deliberate or reckless breach of fair presentation occurs, insurers can still avoid

the insurance and retain any premiums paid. This would normally be from inception except where the breach relates to a variation such as a mid-term adjustment. The onus will be on the insurer to show that a qualifying breach is deliberate or reckless.

Remedies are also available for other breaches of duty of fair presentation. These are based on what the insurer would have done if the qualifying breach had not taken place and the insured had made a fair presentation of the risk. For example, if the insurer would have charged a higher premium, it can proportionally reduce any claim payment or it may impose additional terms retrospectively.

Basis of contract clauses are abolished. These clauses currently operate to turn the insured’s pre-contractual representations, including answers to proposal form questions, into warranties.

Insurer remedies for fraudulent claims are clarified so they will remain liable for all legitimate losses suffered before the fraud.

The duty of good faith remains but the remedy of avoidance is only available if cover would not have been offered if a fair presentation had been made. With the exception of the basis of contract provisions, parties to an insurance agreement can contract out of the requirements of the Act, provided that any disadvantageous amendment is drawn to the insured’s attention clearly and unambiguously. We are not expecting our key insurers to be going down this route.

NEXT STEPS

Although the changes won’t come into effect for more than a year, it is important to start planning for them now. Organisations will need to ensure they are able to satisfy the new law and that they have adequate and effective internal corporate governance and communication protocols in place so that

relevant employees are fully conversant with the changes. A good example of this is the new duty of fair presentation.

Although the change may seem subtle, it will require the insured to introduce new processes to ensure compliance. For instance, the insured will need to make sure a reasonable search is undertaken to reveal material information and that it makes the disclosure in a manner that is reasonably clear and accessible to a prudent insurer. In addition, although the information can be contained in more than one document or oral presentation, data-dumping a large volume of information with insufficient direction of structure would not be considered fair – key facts must not be buried within less-relevant information.

Organisations are likely to see changes ahead of the introduction of the Act. We expect that insurers will be more amenable to altering policies to follow the spirit of the Act, for example, removing basis of contract clauses and improving warranty language.

We will be looking to discuss with our key insurers the possibility of implementing these changes before the Act comes into force. In summary the key provisions that this Act addresses are basis of contract clauses, suspensive warranties and remedies for non-disclosure.

We will also, in consultation with insurers, agree parameters for what is deemed to be a “fair presentation of the risk”. We will provide the appropriate guidance and support to all of our clients, to ensure that broking information is sufficient and compliant.

For more information about the Act, and

how to prepare for it, please call your Lark

Account Handler.

1 2 3 4The pre-contract duty of

disclosure has been replaced by

a new duty of fair presentation.

The law on breach of warrenty

has been changed.

The law on fraudulent claims

is clarified and remedies for

such claims have been set out

in the act.

Provisions for contracting

out are included, subject to

compliance with transparency

requirements.

KEY CHANGES

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L e a r n i n g t o e x p e c t

The UnexpectedW H Y i t ’ s s o I M P O R TA N T t o h a v e a R O B U S T a n d F U L LY- T E S T E D D i s a s t e r R e c o v e r y P l a n .

Martin CampM A R T I N . C A M P @ L A R K I N S U R A N C E . C O . U K

Business Continuity Planning should be an integral part of any business’ strategy. But, for Financial Institutions, it is critical.

The following case study highlights just why it’s so important to have a robust and fully tested plan of action.

ABOUT THE BANK• International banking and insurance

services

• 1,200 employees

• Occupying 12 of 18 floors in a multi-tenant building in the City

THEIR COMMITMENT TO BUSINESS CONTINUITY PLANNING

All Financial Institutions must have a Business Continuity Plan to conform with FCA requirements, but not all have robust plans that are put to the test.

The bank in question was serious about their Business Continuity Management and invested in ensuring its operations and services were available to customers regardless of disruption or interruption.

Their solutions were tested regularly, including full-scale relocation rehearsals involving management and staff on an annual basis. They also participated in industry benchmarking and City-wide exercises.

Interestingly, real-life events replicated the denial of access exercise that had been rehearsed just a few months earlier.

THE ‘CRISIS’

At 7:30pm on an autumnal Tuesday, an engineer carrying out scheduled maintenance on the building’s water sprinkler system inadvertently detached a sprinkler head that formed part of the live drench system on the 8th floor. Around 10,000 litres of water dispersed into the offices below.

Concerned about the potentially fatal mix of water and electricity, Emergency Response Plans were invoked and the fire brigade attended, resulting in a full building evacuation.

BUSINESS CONTINUITY PLANNING TO THE RESCUE

Years of planning and rehearsals paid off, as emergency procedures were calmly and efficiently executed to contain, command and control the situation.

Fortunately, the worst affected floor housed the department least reliant on local IT systems. More worryingly, however, was that the water had quickly started to seep through to the floors below, and critically the floor which was home to the bank’s dealing operations. Of course, it was paramount that dealing operations could continue to run as normal at 6am the next day. The cost of downtime on the trading floor could run into millions of pounds.

By midnight, the crisis management team had liaised with all business lines to inform them of the incident and the potential impact, as well as invoked their alternate site arrangements to give the IT department a head start for a potential relocation.

The on-site engineers were given a cut-off time of 3am to provide a health and safety report, detailing the flood’s impact and to identify what floors would not be operational by 5:45am.

It was clear that the bank would need to relocate staff to other sites, both in the building and also externally.

The strategy was to retain all front office trading and high IT dependent teams within the building, whilst others would relocate to a local recovery centre only a mile away. In all, 322 people were displaced.

By 4am, everyone had been advised where they would be working from and the bank was confident it would be business as usual the morning after the incident.

THROUGHOUT THE CRISIS THERE WAS A CLEAR PLAN OF ACTION:Step 1: Emergency Response Plan

Step 2: Call Tree Notification

Step 3: Command Centre Initiation Plan

Step 4: Implement Crisis Management Plan

Step 5: Implement Business Continuity Plan

Step 6: Follow Communications and Media Plan

Step 7: Invoke Supply Chain where criteria met

The bank’s policy of maintaining and exercising the plans on a regular basis stood it in good stead – experience can’t be underestimated.

COMMUNICATING THROUGH A CRISIS

Communication is key in situations like this, and because of the planning and strategies the bank had employed over the years, they were well placed to get this part right.

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Staff were kept informed of developments and workplace arrangements in a variety of ways:

• Communications and control were centralised, strictly via the Crisis Command Centre

• Staff were issued with ‘wallet cards’ containing emergency contacts and information

• A dedicated staff information line was available and updated daily

• Updated memos were issued 3 times a day, communicating resolution progress and the plans for the next day

• A telephone call tree of escalation was put in place.

ISSUES?No matter how sound a plan and no matter how much it is tested, there will always be a few unexpected issues. However, planning and testing does allow you to resolve these quickly and calmly.

For instance, staff were attempting to return to their desks in the affected areas to retrieve their personal effects. This had not been planned for, but quickly the Business Continuity Management team arranged for escorted access to retrieve possessions and installed a security desk on each floor to prevent unauthorised access.

MEASURES OF SUCCESSThe measure of a successfully managed crisis will wholly depend on the crisis itself, but in this instance it was simply based on financial, operational and reputational loss.

The most important feature of this incident was that, unless told, customers were unaware of the operational disruption, trading was not affected and no business loss was reported.

A full insurance claim was agreed, with insurers involved throughout the process.

The disaster occurred in the midst of a

systemic financial crisis within the industry yet, despite people’s fears over job security, staff and suppliers were flexible, co-operative and conscientious about doing what needed to be done.

INSURANCE PLANNINGOften business continuity is considered internally from an operational point of view, looking at IT systems, back-up of data and how they will interact in the event that the plan is invoked.

However, there can be unforeseen logistical elements that can impact on a recovery and consequently on how the insurance programme operates when called upon.

Reviewing your business continuity plan in conjunction with your insurance programme has a number of benefits:

Manage Claims – without knowing your priorities and requirements, how will your insurer respond in the event of a claim? Preparation before a claim can really pay off, as you’ll be able to start to build trust in the people you will be relying on. They can also prepare you for what may be needed during a claim. Being involved with a claim at the start can make all the difference in getting prompt decisions, interim payments and speeding up the settlement.

Expectations – do you know what to expect from your insurance in the event of a claim? If not, can you be confident that your plan will be effective?

Assessment – having a written plan is all well and good, but if it is not tested in realistic circumstances there is no way of telling if it is fit for purpose. If you don’t know that your plan will respond, how do you know that your cover is adequate?

Saving – tailoring your cover, rather than simply over-insuring in an attempt to compensate for any eventuality, will result in a premium saving. Money is only well spent on insurance if you are getting the cover you

actually need.

Underwriting – will your plan be able to rely upon the type and level of cover that you have in place? Or does this need to be reviewed? Having this knowledge in advance means that there won’t be any nasty surprises to deal with in addition to the claim. There are a lot of questions to pose, such as:

“Is replacement equipment available off-the-shelf or are there lead-in times that need to be considered?”

“Is loss of income likely, or is your revenue predominantly annuity income?”

“Is your maximum indemnity period adequate?”

Specialist advice is key to ensuring that all of your questions are answered.

Risk Management – have assessments been undertaken of any third-party data centres or disaster recovery sites you are planning to use to ensure that they are robust enough to meet your requirements?

Economic – ultimately the choice needs to be made; do you invest time and money in the business continuity plan itself, or do you transfer the risk and pay for insurance cover?

WHAT YOU NEED IS INSURANCE THAT IS, QUITE SIMPLY, MADE TO MEASURE.

For more information please contact Martin Camp:

martin.camp@larkinsurance.co.uk

020 7543 2806

PLANNING IS BRINGING THE FUTURE INTO THE PRESENT so that you can do something

about it now.

FINANCIAL INSTITUTIONSINSURANCE

MADE TO MEASURE

To discuss your insurance needs, contact:

Martin Camp020 7543 2806

martin.camp@larkinsurance.co.uk

WWW.LARKINSURANCE.CO.UK

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Client engagement is about building personal relationships, it is about building a complete picture of their

financial and private affairs, and their needs and goals. This has not changed in the age of social media. What has changed is the way in which clients want to connect and engage with you, and in this regard, no matter what the size of your business or the nature of your market, we are seeing the dawn of a new age of social engagement.

THE AGE OF THE CLIENT

Today, the client is in charge of their journey. Social, online and mobile resources have created information parity and this has led clients to be significantly better informed and socially engaged. They can find out anything they want to know about your products and services, and they have more choice than ever before. What is more, they can be fickle. Clients can develop opinions about your brand, your people and your products without ever reading a brochure or listening to a sales pitch.

At the same time, they are also reaching out through their news, editorial, blogs and social media posts. These channels can provide you with insight into what they want and when they need it. Businesses expect you to be listening to them and responding to these signals, but they don’t want cold calls or generic sales pitches. They want to feel that they are seen as an individual and that you want to build a responsive relationship with them.

THE EVOLUTION OF ENGAGEMENT

If your clients are evolving new ways to make informed decisions about their portfolios, then you must likewise evolve new ways to reach out to them.

According to a recent study by Forrester, eight

out of ten clients still believe that agendas are not driven from their perspective. All too often they see companies using conversations as just an opportunity to deliver a sales pitch. This is not a great foundation for a mutually beneficial relationship, as a generic approach is unlikely to address the client’s individual needs or problems. This won’t engender trust or the belief that your people and your business will be able to deliver the bespoke solutions they are looking for.

Trust is important. But with organisations, and the leaders of business in particular, this is at an all-time low. This is why personal relationships are so valuable. Trust in companies might be low, but research suggests that people trust ‘people like them’. However, in the social age, trust is harder to earn than ever before. Clients are armed with enough data to make their own decisions based on portfolio comparisons and, with an ever-increasing breadth of choice, they can easily switch to a new service provider. The more trust a client has in you, the more comfortable they will be in the advice you provide. Trust is based on relationships, and relationships are built on regular, timely, needs-driven and meaningful interactions.

Just as your clients are using social media and the web to do their homework and bring perspective to their portfolio decisions, so you too must harness the huge amount of data out there to bring perspective to your approach and align your behaviour to theirs. It is about moving beyond traditional techniques, and

instead harnessing the internet and social media to listen to and understand each individual client’s needs as they change and evolve. In doing so, you will uncover the trigger events and actionable insights needed to engage them in more meaningful conversations.

But it is not all one-sided, it is also about moving your business forward, staying relevant and levelling the playing field. Client needs constantly evolve as markets change, new markets emerge and risk appetites change. Social media offers you the opportunity to lead the discussion and shape client opinions with unique insight that will propose solutions to client problems before they even realise they have them. You no longer need to pick up the phone or book time in their busy schedules, you can reach out and engage with them every day.

EMBRACE THE OPPORTUNITY

You can no longer rely on success from traditional methods. Your business, your clients and your interactions are all playing out on social media. You need to be where your clients are and tuned into their needs and demands. You need to ensure that you are delivering clear, consistent and compelling reasons for them to engage with you in ways that make sense to them.

By expanding your toolkit to leverage social resources, client engagement will ultimately be better informed. You will have even greater opportunities to reach out to them, fix their problems and help them accomplish goals and realise opportunities.

For more information on the importance of engaging your clients through social media, please contact Jack Holroyd:

Jack.Holroyd@artesiansolutions.com

Andrew Yates, CEO and Founder of Artesian Solutions,

talks to us about the importance of engaging clients on

all fronts.

Social Agethe

IN THE SOCIAL AGE, IT’S NO LONGER WHAT YOU

KNOW OR WHO YOU KNOW; IT’S WHAT YOU

KNOW ABOUT WHO YOU KNOW

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There is no doubt that Cyber Threat is the topic of the moment. It features on the agenda of most board and audit

committee meetings and it is on the minds of many organisations.

Information is the lifeblood of an organisation and we are all increasingly more reliant upon technology and information assets. In the UK, cyber security has been defined as a Tier 1 threat to the nation, making it a strategic risk management issue for all organisations. In mid-2013, MI5 wrote to the board of every FTSE350 company urging them to ensure that they were taking adequate steps to protect themselves.

WHAT IS ‘THE CYBER THREAT’?

This is the million dollar question. And you won’t get the same answer twice.

Cyber Threat is a convenient label applied to the multitude of risks to data, information and the systems which store and process it. These risks could be precipitated by events or actions as varied as external hacking, social engineering, a compromised third-party supplier or an employee leaking information. These are diverse activities that are likely to require a very different response to remediation and ongoing management.

SHOULD WE BE CONCERNED ABOUT THE CYBER THREAT?

The answer, categorically, is ‘Yes!’. Globally, with security incidents on the rise, reputation, regulatory status and financial well-being are more at risk now than ever before.

No matter what size your business is, cyber criminals are opportunists and will always be on the lookout for soft targets. They know larger organisations have big security budgets

and will, usually, have better detection capabilities that are more likely to spot and deal with a security breach before it escalates.

Latest government figures indicate that 81% of large corporations and 60% of small businesses reported a cyber breach, with each breach estimated to cost between £600,000 to £1.15m for large businesses and £65,000 to £115,000 for smaller companies.

UNDERSTAND THE RISKS

Organisations clearly need to respond to the threat. But where to start? Technology companies will tell you to buy their software whilst IT service companies will tell you to outsource your IT to them. Software, security tools, penetration testing and transferring some of the risk to a third-party (via outsourcing) may be part of the solution but, applied in isolation to the Cyber Threat, there is a very real risk of missing the point. The best technology and tools can be undermined by weaknesses in basic security practices or by a flawed corporate culture.

Today’s cyber criminals are adopting approaches which step away from the purely technical and look to exploit weaknesses in the way that organisations manage, control and interact with their information. This means that the corporate approach also needs to shift from one of ‘implementing security’ to one of ‘information risk management’. The foundations of good information and security governance include:

• user access management

• clear policies on security, e.g. acceptable system and social media use

• staff security training and awareness

• oversight of third-party suppliers

• timely application of software security updates.

Fundamentally, addressing the Cyber Threat means going back to basics and understanding your organisation’s information (where it is and how it is used), identifying risks to your information assets and ensuring that the right measures are adopted to mitigate risks to within acceptable levels (balancing cost vs risk). That is why investment in people, skills and robust policies and processes is crucial. The Cyber Threat is a problem for the entire business to solve – not just IT.

STAY ON TOP

Putting it simply, the approach that should be taken in building a robust Cyber Security Strategy has not really changed much in the past 10 years.

To be truly effective, an organisation should make sure that they consult and collaborate with their peers and utilise the ‘weapons’ that are available to them, whether these be close to hand (e.g. policies, procedures, audits) or those specifically designed by security service vendors to keep the bad guys at bay.

Even if you successfully fight off a Cyber Threat you can be sure that they will return; bigger and badder than before. So, make sure your organisation is always prepared.

For more information on the dangers of cyber-attacks, and how Cyber Liability Insurance can protect your business interest, please contact Martin Camp:

martin.camp@larkinsurance.co.uk

020 7543 2806

Cyber-Attack Protect yourself from the fallout

Mark Child, Partner at Kingston Smith

Consulting LLP, talks to us about how we can

head off the threat posed by cyber-attacks

COMPANIES NEED TO PREPARE FOR A DOOMSDAY SCENARIO – AT THE VERY LEAST TO ENSURE THAT, IF AND WHEN A BREACH

OCCURS, A STRATEGY IS IN PLACE

D i v i s i o n a l D i r e c t o r , M a r t i n C a m p , t a l k s a b o u t t h e d a n g e r s o f u n d e r i n s u r a n c e

Cover Spotlight

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Undervalued?A l l y o u N E E D t o K N O W a b o u tt h e r i s k s o f u n d e r i n s u r a n c e . . .

Martin CampM A R T I N . C A M P @ L A R K I N S U R A N C E . C O . U K

U nderinsurance is a subject which is becoming a growing concern for many Financial Institutions as ensuring

that the right sums insured are covered is often complex and the values in question can change quickly.

The widespread nature of underinsurance in the property market was underlined by research carried out recently by the Building Cost Information Service, which is part of the Royal Institution of Chartered Surveyors. It found that 80% of commercial properties are underinsured.

In similar work, the Chartered Institute of Loss Adjusters found that 40% of business interruption policies are underinsured with the average shortfall being 45%.

When it comes to business interruption, for example, the definition of gross profit is not consistent between insurers, accountants and Financial Institutions, and this can immediately lead to problems. Accountants will generally strip out things like staff and utility costs whereas insurers will not. Businesses also tend to underestimate how long it will take to get back on their feet and the standard business interruption indemnity period of 12 months is simply not enough.

Having a comprehensive insurance programme in place is only the first step, this needs to go hand in hand with continually assessing sums insured and ensuring accurate levels of cover are in place. This will help the business recover faster and remain in a strong commercial position following a major claim.

Some businesses are underinsured by more than 50% and on average, across all sectors the level of underinsurance is 20%.

WHAT IS UNDERINSURANCE?

In summary, underinsurance occurs when either the sums insured on a policy do not represent the current value of the items at risk or where limits within a policy are inadequate for a client’s needs. It is important to remember that any sum insured should represent the full extent of the risk. For example, the buildings sum insured should not only cover the building materials and labour costs required to rebuild the property but it also needs to cover any debris removal costs, architects’ fees, local authority fees and so on.

Businesses also need to fully understand the type of insurance in place. Reinstatement cover will replace old for new while indemnity cover will pay out the market value of the property at the time of the loss. As such, the difference between what a business thinks it is covered for and what it is actually covered for, can be significant.

Unfortunately, if all these factors are not taken into consideration, in the event of a claim, being underinsured will result in a financial loss to the client as insurers will apply an average to any losses, but what does this actually mean?

Average works by reducing the amount of the claim by the same amount of underinsurance, for example:

A client’s building is insured for £500,000 and a fire occurs causing £200,000 worth of damage. If the correct value of the building is actually £750,000 insurers will consider that the client has only insured the building for two-thirds of the risk and as such will reduce the claim payment by a third. Therefore the

initial £200,000 claim would be reduced by £66,660 and settled at £133,340 LESS any policy excess that would then be applied; this illustrates the financial loss that will be incurred by the client.

HOW TO AVOID UNDERINSURANCE

There are some key areas where underinsurance can be especially prevalent. These include, assessing the correct level of business interruption cover (both in terms of calculating Gross Profit for Insurance purposes as well as identifying the correct period of recovery), maintaining an up-to-date register of all machinery, plant and contents and understanding the replacement value of these items and, finally, confusion around the market value and rebuild costs for commercial property.

It is important that a business works closely with their insurance brokers to continually assess sums insured and policy limits to avoid the potential of being underinsured.

At Lark, we regularly undertake these assessments and also introduce our clients to professional valuation companies who can provide further assistance.

Please do not hesitate to contact your Lark Account Handler for more information.

martin.camp@larkinsurance.co.uk

020 7543 2806

16

The start of a beautiful relationship

17

At Lark, we believe in supporting good causes, which is why we have been working closely with the Royal College

of Music for the past three years.

During this time we have continually supported their scholarship programme and have enjoyed the benefit of watching new musical talent emerge.

Music is in the lifeblood of our new Royal College of Music (RCM) Scholar, Alexandra Lomeiko.

Alexandra, 23, was born in Novosibirsk, Russia, but her musical family was always travelling. When she was five, they eventually settled in New Zealand and her mother began to teach Alexandra how to play the violin.

At 12, she started to play a full-size instrument, a Frederic Chaudiere violin, made in 1999. Alexandra says she became very attached to it.

She said: “I was very shy and it was due to this that I became so close to my violin. It never let me down and it was always there for me.”

Alexandra moved to London to study at the Purcell School of Music when she was 15 and went on to take her BMus degree at the Guildhall School of Music and Drama in 2010 before starting her Masters in Performance at the RCM in 2014.

She said: “Earlier this year the RCM loaned me a violin made by Carlo Tononi of Cremona, it was made in 1687. Although I’ve only had it for a few months, I’ve begun to fall deeply in love with it.

“The aged wood and the beautiful craftsmanship has created a violin which is phenomenally responsive and produces the most irresistible sound.

“It is a special relationship that a violinist has with a violin, because there is only so much that a violinist can control. The real magic happens through the body of the finely crafted instrument, a magic to which we violinists owe our lives!

“The music and the emotions musicians put into their instrument is parallel to the same emotions we put into our relationships with people, so if my violin was lost I would find that hard to deal with.”

Alexandra says being at the RCM is “now really beginning to feel like home”. She said: “It has a family-like atmosphere and the historic building is great at motivating practice and inspiring ideas.

“The MPerf programme has a great balance and variety of modules to prepare me for my professional career and the performance opportunities the RCM provides are helping me get the experience I need before emerging into the ‘real’ world.”

Alexandra performs chamber music and solo recitals and also works with many London orchestras through student placement schemes.

SILK STREET SINFONIETTA

In 2013, she and her friend, Luba Tunnicliffe, formed an unconducted chamber orchestra, the Silk Street

Sinfonia, which Alexandra leads from the violin.

Alexandra said: “I want to push Silk Street Sinfonia to a more professional level, performing in more prestigious venues with amazing soloists such as violinists Leonidas Kavakos, Maxim Vengerov and Itzhak Perlman.

“My dream is to play alongside the pianist Emmanuel Ax and violinists Janine Jansen and Laurence Power.”

Alexandra says she has learned how much more enjoyable a concert becomes when the performer talks to the audience during the concert.

She said: “I loved the performance for Lark Insurance at the RCM because it was a light-

hearted audience who were appreciative and enthusiastic.

“As a Lark scholar I feel unbelievably lucky to be sponsored by a company that is doing such great things for musicians and is so supportive and interested in my studies.”

Alexandra added: “The past three years have been difficult for my family. Since the earthquake in Christchurch, in February 2011, my parents have only been able to do limited work and, were it not for Lark’s generosity, I probably would not have been able to continue my studies here.”

For further information about supporting a scholarship at the RCM, please contact Fiona Rose at fiona.rose@rcm.ac.uk

LarkMusic Investing in the future.

H e a r f r o m o u r L AT E S T R o y a l C o l l e g e o f M u s i c S c h o l a r .

Click here to read our Larkmusic Publication

18

MAKING CRITICAL ILLNESS SIMPLE FOR EMPLOYERS

Employees’ health and wellbeing is a subject that is moving up the UK boardroom agenda.

With wellbeing and happiness at work often being quoted as being as important and motivational to employees as annual pay, many employers are now taking the time to review their employee benefit packages to help recruit and retain the best staff.

One of the benefits on offer is Critical Illness cover. This product has been around for some time and supports an employee in the event of a critical condition such as cancer, a heart attack or stroke, by paying a lump sum which can ease some of the financial pressure during their recovery.

There are 63,000 people living in the UK with a critical condition, many of whom want to live as normal a life as possible including being able to return to work. With one in four women and one in five men being affected before retirement, providing this cover demonstrates a tangible interest in staff wellbeing whilst helping employees to recover and return to a normal working life.

Traditional Group Critical Illness cover has been criticised by some employers for being too complex, listing many conditions which add little or no value and excluding pre-existing conditions.

That is why leading group risk insurer Unum has worked hard to develop a truly simple policy.

SimpliCIty Critical Illness by Unum provides

cover for the ten conditions shown to be the majority of all critical illness claims.

Whilst an employee will not be able to claim for a condition they have when the policy starts, once all clear, they will be able to claim for a new occurrence of the same condition.

Sums assured can be set by employers up to a modest limit helping claimants with the expense of treatment and recovery.

As a preferred partner of Unum, Lark Employee Benefits is one of a select few providers who can offer this market leading product to their clients.

“It’s fantastic to be able to offer such an effective product with so many options. Working with an industry leader such as Unum gives us and our clients real confidence in the solution we are providing.” – Samantha Mistry, Director of Employee Benefits at Lark.

To find out more about SimpliCIty Critical Illness by Unum or to review your employee benefits offering, please contact Samantha Mistry.

samantha.mistry@larkinsurance.co.uk

020 7543 2818

Sam MistryS A M . M I S T R Y @ L A R K I N S U R A N C E . C O . U K

SimpliCItyC r i t i c a l I l l n e s s c o v e r m a d e s i m p l e .

BASED IN THE CITY OF LONDON

We pride ourselves on quality personal service and our honest, loyal and professional approach. We draw on a wealth of experience and technical knowledge to ensure that our clients receive specialised and comprehensive advice.

For more information, call Samantha Mistry on 020 7543 2818

19

Eloise Ellis, New Business Development Executive, is the focal point for this edition of Meet The Team.

ABOUT MY ROLE

I deal with Lark’s New Business clients, providing advice and pulling together made-to-measure insurance programmes for those in the Financial Institution sector. My areas of expertise include Liability, Asset Protection, Professional Indemnity, Cyber Liability, Directors’ & Officers’ Liability, Crime, Travel and Business Continuity. Alongside helping companies arrange the best cover, I also work on further developing and enhancing our range of products and services.

I also head up Lark’s relationship with the London Business Angels (LBA) – one of Europe’s leading Angel Investment Networks – who we have sponsored for a number of years. Through this partnership, their members have access to our exclusive ‘Angel Protect’ product, a specialist individual D&O policy tailored for Angel investors.

MY CAREER AT LARK

I joined Lark in 2005 as an A-Level trainee because I wanted to get straight into pursuing a career, as opposed to going to university.

When I joined, I had little knowledge of what a broker actually did! Fortunately, I have learned a lot since then. I originally started in our Maidstone office working on SME renewals and in 2008 I made the move to London to join the Commercial New Business team.

Ten years is a long time to be at one company in any industry, particularly the insurance sector, but it’s a testament to what a good company Lark is.

A ‘NORMAL’ WORKING DAY

My job is extremely varied and there isn’t really a ‘normal’ working day. I don’t tend to be at my desk much as I am either out meeting with clients or seeing underwriters to negotiate terms. I also attend industry events and seminars, both as a guest and as a speaker. This is something that I really enjoy.

FAVOURITE PART OF MY ROLE

The aspect of my job that I like the most is getting to know the clients and understanding how their business works so that I can help them. It is always satisfying when you find a solution for your client and know that you have made a positive impact on their business.

While insurance is generally considered to be a dull topic, the financial sector has so much variety and so many interesting people that I think this doesn’t hold true.

OUTSIDE OF WORK

I am a bit of a tomboy at heart, so I enjoy watching sports and have had a season ticket at Gillingham FC for over 20 years. I am also really into motor racing, particularly British Touring Cars, and I try to do as many track days as possible. This means I have had the privilege of driving some fantastic cars. Most recently I was behind the wheel of an Aerial Atom. I also enjoy visiting new places and make sure to take time to do regular city breaks.

A LIFE WITHOUT LARK

I would love to have my own bar and restaurant on the Amalfi coast. Alternatively, I can imagine myself having become a travel writer, a sports journalist or, of course, a racing driver!

M e e t

Our peopleL e a r n a b o u t k e y m e m b e r s o f t h e L a r k F I t e a m .

@lark_fi

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