UK companies are exposing themselves to significant and unnecessary losses due to serious flaws in the way their corporate insurance policies are arranged according to a new study of commercial risk carried out by the specialist research firm Mactavish, in association with PwC.

The study reveals serious deficiencies in how corporate insurance is arranged and the role of boards in governing those arrangements. This is leaving companies vulnerable in the event of a large loss and subsequent dispute with their insurer.

The report paints an alarming picture of inadequate disclosure, widespread ignorance of a very challenging insurance law framework, managerial failure to gather relevant information, deeply uncertain policies and a lack of understanding of how large claims are processed.

Bruce Hepburn, chief executive officer of Mactavish, said: “The deficiencies the report reveals in how insurance is arranged are disturbing.What we see today is a system that has prioritised low transaction costs above reliable insurance policies. This approach is not fit for purpose for the environment we are now moving into. UK businesses, especially medium-sized companies, are putting themselves unnecessarily at risk and in today’s economy are far more exposed if a major insurance policy fails to pay out. Customers, brokers and insurers must all start to invest adequate time into securing appropriate insurance.”