With the impending Brexit date (29th March 2019) nearly upon us, one consequence could be that companies become less likely to trade in Europe and more likely to look further afield. One option could be to source products from China and the Far East. When products are bought in bulk from China for wholesale or retail in the UK it is imperative that your insurer knows what type of product is being imported and in what quantity.
When goods manufactured in Europe are imported, it is usually the case that a clear chain can be followed back to the manufacturer so that, should issues arise with a product, the liability can be passed back up the chain. When goods come from China this could prove to be more difficult; it can be problematic to identify the original manufacturer of the product, & even if the supplier is identified, Chinese manufacturers rarely purchase products liability insurance. The legal framework in China also makes it more difficult for your insurers to pursue a recovery should a claim occur. In this instance your insurers will take the view that you are effectively the manufacturer of the product and charge a higher premium to reflect their lack of recovery potential.
The Insurance Act 2015 now means that a policyholder has a duty to provide a “fair presentation of the risk” to insurers. Therefore, when discussing your risk with a broker you should always provide as much information as possible regarding which products are imported, where they are imported from and how much of your turnover relates to each product. Only then can insurers assess the risk fully and charge the appropriate premium. If a claim occurs & an insurer feels that they have not been given the full information about the origin of the products, to the extent that they might not have taken on the risk in the first place, the insurer could avoid the insurance contract or refuse to pay a claim.
By Peter Ryder – Account Executive