BUSINESSES are placing themselves at risk by reducing their commercial insurance cover, new research has revealed.

The recession is believed to be the biggest factor, according to the British Insurance Brokers’ Association, which surveyed members recently and found more than 45% of brokers were reporting clients taking on more risk themselves.

Insurance Institute of Guernsey president Andrew Mills (pictured) said it was a bad idea for businesses to take such action and he hoped Guernsey companies would not see it as a way to cut costs, especially during challenging times.

‘Insurance is placed by businesses to help them to finance risks they do not wish to bear or cannot bear themselves. If a business removes this protection or some of it, it puts itself at risk of having to bear financial losses it cannot fund.

‘The result could then be that the business cannot continue and there is always a possibility that company directors, principals or other officers could be personally liable to meet some or all of the loss the business cannot fund.’

The BIBA also found that 40% of brokers had seen clients reduce estimates for turnover and wages as a result of the recession.