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Study reveals business insurance confusion and risks for creative agency owners

Study reveals business insurance confusion and risks for creative agency owners

A study into the creative agency landscape has found that the majority of agency owners are confused by insurance, which in turn leads to risks of being incorrectly insured for key contracts and tenders.

Respondents’ comments from the research include: “We learned the hard way, being caught out and discovering we were not insured cost us £30k.” and: “Insurance is complicated. Forms are difficult to understand if you don’t know the terminology.”

The national study was conducted by North West-based creative business insurance specialist, Risk Box. 50 agency owners took part in the online survey and focus group sessions, held in Manchester last month, to help Risk Box develop its understanding of how changes to working attitudes and environments have affected insurance.

Sam Johnson, Insurance Specialist for the Creative and Digital sector at Risk Box, comments: “We know that the agency landscape has changed considerably over recent years, particularly when it comes to areas such as technology, remote working, employment contracts with freelance teams, and travel. It was essential for us to find out how these elements have impacted on the insurance cover needed and how agency owners have kept up-to-date with their understanding of the risks and liabilities.”

Highlights of the findings, which have been published in a new white paper on the Risk Box website, include:

  • Confusion is rife- agency owners tend to have a cursory knowledge of the insurance industry at best. Over 75% of respondents’ understanding was either outdated or put together from hearsay.
  • There are difficulties with cover meeting tender and contract requirements- many agencies are immediately in breach of contract simply due to a lack of understanding of the process.
  • Late notification of claims is a huge issue in the creative industries and leads to many claims being thrown out– particularly for cases surrounding professional indemnity. Being able to approach a broker with scenarios before making a claim is essential. 

Other findings show that most agency owners understand the value of insurance - 83% of agencies list "protecting the business" as a key reason for purchasing insurance in the first place, while 67% felt motivated to buy out of legal obligation. And, in contrast with the personal insurance market, which is driven by comparison sites and online-only services, the role of the broker is highly valued in the business insurance sector.

The study also highlights that the challenge for insurers and brokers is not to exploit their clients' lack of knowledge and understanding, but to become a trusted provider with excellent communication, tailoring their services accordingly to each client, in order to build a better relationship between creative agencies and the insurance industry overall.

This was particularly highlighted in the focus group session, with one participant commenting: “In my personal experience, brokers save us money while giving us confidence that we have the right level of cover. In the creative industry, there’s so much flexibility in the exposure of the business from month to month; with a broker you can trust that someone is working with you rather than ticking a box every year.”

Michael Henderson, founder of Risk Box, concluded: “It’s understandable that agencies tend to place greater value on services that reduce the risks of legal action, such as cyber risk management and for contracts or tenders, and our study found this is where agency owners need particular consultation and guidance. Personal relationships are essential for thorough understanding, which can save time, money and ensure legal requirements are met, something Risk Box takes pride in offering to all our clients.

“We’re very grateful to all those who took part in this study. It’s provided us with essential insights which we will use to continue making a positive impact on insurance for creative industries.”

The Risk Box white paper can be downloaded at http://riskboxuk.com/?p=827