What is the potential impact of a cashless society on your insurance needs?
It won’t have escaped most of you that cash transactions are falling. Card payments overtook cash payments in the UK for the first time in 2017 mainly because of the increasing popularity of contactless payments.
Is the UK set to become a cashless society?
Our attention was drawn to a Commons Treasury select committee report published recently which stated that the UK risks “inadvertently becoming a cashless society”.
The report warned that banks might be forced to retain a physical network for the many vulnerable people who could otherwise be left with no access to face-to-face services. While this is a serious consideration, as insurance brokers we are concerned with ensuring our customers’ insurance needs are met. Will the insurance industry deem cashless transactions to be a reduced theft risk for retail businesses and correspondingly reduce premiums, for example?
Is money insurance still required in a cashless society?
Most businesses either consciously or unconsciously buy money insurance for money being held on their premises or being carried by employees. Typically, insurance is also provided in the event of personal injury should a loss occur following an act of violence.
There are many variations of cover, limits applied and different types of money that need to be considered:
• Cash and negotiable money – anything that is, essentially, untraceable and is easily spent or used. As well as notes and coins, this includes postage stamps and gift tokens.
• Non-negotiable money – includes crossed cheques and (paper) credit card sales vouchers, which cannot easily be used. Fraudulent activity is usually required to convert to cash. It is rare for a loss to happen.
It’s likely that the insurance industry will adapt and evolve but we don’t think there will be material premium reductions if money cover is not required.
This cover is rarely bought as an individual purchase – mostly it is part of a package of covers and is increasingly not individually rated. Whilst cash may not be king in the way it once was, we also recognise that there are issues with networks failing and security risks with electronic transactions.
Which insurance covers will become increasingly important?
We will probably see other covers emerging in importance such as:
Commercial crime includes acts of theft, fraud and embezzlement, and it is often trusted employees who are the culprits. Dealing with commercial crime can be incredibly difficult for organisations, from both a practical and emotional perspective.
Cyber insurance covers a business’s liability and its ability to manage the impact of a cyber incident on its systems and finance. We would strongly advise all businesses, however large or small, with any reliance on systems and data, to consider protecting their online business. This should be treated with just the same level of importance as covering tangible assets – if not more so.
If you have any questions about how this may impact you or your business don’t hesitate to get in touch with us at Anthony Jones.