Inflation and Insurance: An Insight | Full Time Cover

Inflation and Insurance: An Insight


Inflation, due to a number of different factors, is causing inflation across a huge number of different industries. Whether it’s supply chain disruption, the aftereffects from the pandemic or the war in Ukraine, everything is starting to cost more as an effect. And when it comes to insurance, it’s no different. As costs for everything like raw materials, energy and workers increase, so does the cost of cover to protect you from some of the very things inflation is causing. In the business world, this can range from business interruption insurance to professional indemnity insurance. So how is inflation affecting some of the major types of business insurance?

Business Interruption Insurance


When the pandemic hit, a huge number of businesses were interrupted. Whether it was due to companies having to change the way they operated, or even having to temporarily shut their doors to all their customers, pandemic interruptions saw an increase in claims for business interruption insurance.


Some insurers were reluctant to pay out initially, but a lot of claims were processed and accepted when it came to specific business disruptions due to the pandemic. The mass increase in claims and subsequent payouts have seen premiums increase for business interruption insurance across the board, and the subsequent inflation of which the pandemic was a part means that premiums aren’t falling even with the demand for business interruption insurance declining after lockdowns have been lifted.

Professional Indemnity Insurance


Inflation in professional indemnity insurance has primarily come about due to two factors: the rise in legal defence costs and higher settlements. The inflation in legal defence costs has come about due to the backlog in courts, which is partially a result of the pandemic, and the rise in costs for many different players in the legal world. Higher settlements have come about due to the inflation in costs and prices in the wider economy.


These factors are affecting a number of different types of business insurance and not just PI, including public liability insurance, employer’s liability insurance and directors & officers insurance.

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Commercial Building Insurance


Also known as business building insurance, the cost of commercial building insurance is due to a number of different inflationary factors. If something gets damaged and requires repair, the cost of work will be determined by the increase in raw materials and also the increase in wages for labour to ensure that workers are getting a pay rise to combat rising inflation.

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Business Equipment and Office Contents Insurance


As the price of everything increases, so does the cost of buying and replacing equipment and office contents. So if something like a computer is damaged, the cost of placing it would be more expensive now than it would have been a year or two ago. This then has a knock-on effect on business equipment premiums, with them increasing to reflect the increase in equipment prices due to inflation.

How To Combat Insurance Inflation


With the cost of everything going up, there’s not much you can do to halt the increases in insurance premiums due to inflationary factors. However, what you are able to do is reassess your business insurance coverage to ensure that it’s giving you the right protection for your business.


So no matter whether your business has grown, shrunk slightly or transitioned from physical space to digital space, you can work with Full Time Cover to ensure you have the most suitable protection for your organisation. It’ll allow you to cut back on areas where you don’t require cover whilst also strengthening your position in the areas where having protection will be beneficial in the long-term outlook for your business. Call us on 0207 923 4191 to discuss your options.

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