Joro audit results & recommendations for Project Blu
Joro High Level Insurance Review & Recommendations
Prepared by: JORO
For: Project Blu Ltd
Date: March 18, 2025
1. OVERVIEW
Project Blu Ltd is an import, wholesale and e-commerce business specializing in pet products manufactured from recycled materials (e.g., cat/dog beds, leads, and toys). Based on the insurance documents provided, Project Blu has several insurance policies in place to protect against various business risks.
Current Insurance Coverage
Cyber Insurance
Insurer: CFC Underwriting Limited (underwritten by certain underwriters at Lloyd's and other insurers)
Annual Premium: £6,774.00 (including £699.00 Insurance Premium Tax and £250.00 administration fee)
Policy Period: January 22, 2022 - January 22, 2023
This policy covers cyber incidents, including data breaches, system damage, business interruption, and cyber crime. The coverage includes incident response, legal and regulatory costs, IT security, crisis communication, privacy breach management, and various cyber crime scenarios such as funds transfer fraud and extortion. The policy provides multiple coverage sections with limits up to £1,000,000 for most sections and lower limits (£250,000) for specific cyber crime scenarios.
Commercial Combined Insurance
Insurer: Arch Insurance (UK) Limited
Annual Premium: £8,183.68 (including £876.82 Insurance Premium Tax)
Policy Period: January 20, 2021 - January 19, 2022
This policy includes several key coverages:
- Property Damage: Coverage for machinery, plant, fixtures, fittings (£5,035) and electronic business machines (£2,014).
- Business Interruption: £3,500,000 with a 12-month indemnity period, covering gross revenue loss.
- Employers' Liability: £10,000,000 limit.
- Public Liability: £5,000,000 limit with a £500 third-party property damage excess.
- Products Liability: £5,000,000 limit.
- Legal Expenses: Coverage through DAS Legal Expenses Insurance Company Limited.
Marine Cargo Insurance
Insurer: Aviva Insurance Limited
Annual Premium: £525.00
Policy Period: January 20, 2022 - January 19, 2023
This policy covers pet products during transit with limits of £60,000 per vessel/aircraft/road/rail conveyance and £120,000 per location/loss. The estimated annual sendings are:
- Western Europe (Italy) to United Kingdom: £500,000
- Western Europe (Italy) to Western Europe: £2,000,000
- Western Europe (Italy) to North America (USA): £1,000,000
Management Liability Policy
Insurer: AXA Insurance UK plc
Annual Premium: £4,404.40 (including £471.90 Insurance Premium Tax)
Policy Period: January 20, 2022 - January 19, 2023
This policy provides:
- Directors' and Officers' Liability: £2,000,000 limit
- Employment Practices Liability: £250,000 limit with a £10,000 excess (reducible to £1,000 under certain conditions)
- Company Legal Liability: £2,000,000 limit with a £5,000 excess
Purpose of Coverage
- Public and Products Liability: Protects against claims from third parties for bodily injury or property damage arising from your business activities or products.
- Employers' Liability: Legally required coverage that protects against employee claims for injury or illness resulting from their employment.
- Property Damage: Covers damage to your business assets due to perils like fire, storm, theft, etc.
- Business Interruption: Compensates for lost income and extra expenses if your business operations are interrupted due to a covered event.
- Cyber Insurance: Protects against financial losses from cyber events like data breaches, ransomware, and system failures.
- Marine Cargo: Covers your products during transportation.
- Management Liability: Protects directors, officers, and the company from claims related to management decisions, employment practices, and regulatory issues.
3. COVERAGE TABLE
| Coverage Type | Category | Project Blu Claim Scenarios | How to Make a Claim | Annual Cost |
|---|---|---|---|---|
| Employers' Liability |
Preference for new policy |
An employee suffers injury while handling inventory in the warehouse | Report to insurer immediately. Document incident details, witnesses, and medical reports. Expect 3-6 months resolution with potential legal costs if disputed. | Part of Commercial Combined Policy: £8,183.68 |
| Public Liability |
Preference for new policy |
A customer slips and falls at your premises; third-party property damage during business operations | Contact insurer within 24 hours. Gather evidence, witness statements, and CCTV footage if available. Typical resolution: 2-4 months. £500 excess applies. | Part of Commercial Combined Policy |
| Products Liability |
Preference for new policy |
Pet injury from product failure (e.g., broken leash); property damage from defective products | Notify insurer immediately. Preserve the product in question, collect customer details and complaint documentation. Resolution time: 3-12 months depending on complexity. | Part of Commercial Combined Policy |
| Business Interruption |
Preference for new policy |
Operations halted due to fire/flood at premises; supply chain disruption from supplier in Italy | Contact insurer within 24 hours of incident. Document financial impact with accounting records. Maintain detailed records of additional expenses. Claims typically settled within 3-6 months after business resumes normal operations. | Part of Commercial Combined Policy |
| Property Damage |
Preference for new policy |
Damage to office equipment or warehouse inventory due to fire, theft, or water damage | Report to insurer within 24 hours. Document damage with photos, inventory lists, and repair/replacement estimates. £350 excess applies. Resolution typically within 1-3 months. | Part of Commercial Combined Policy |
| Marine Cargo |
Preference for new policy |
Damage to products during shipping from Italy; loss of container during transit | Notify within 24 hours of discovery. Note discrepancies on delivery receipt. Document with photos, inventories, shipping documents. £250 excess applies. Fast track claims under £5,000 available. | £525.00 |
| Cyber Insurance - Incident Response |
Preference for new policy |
Data breach affecting customer information; ransomware attack locking systems | Call 24/7 incident response line (0800 975 3034) immediately upon discovery. Follow guidance from cyber incident manager. No deductible for incident response costs. | Part of Cyber Policy: £6,774.00 |
| Cyber Insurance - Business Interruption |
Preference for new policy |
Website down due to cyber attack affecting online sales; system failure preventing order processing | Call incident response line immediately. Document financial losses and additional expenses. £5,000 deductible applies with 8-hour waiting period. Claims typically resolved within 3-6 months. | Part of Cyber Policy |
| Directors & Officers Liability |
Preference for new policy |
Claims against directors for breach of duty; regulatory investigations | Notify AXA immediately upon becoming aware of potential claim. Provide all relevant documentation. No excess applies. Resolution can take 6-18 months. | Part of Management Liability Policy: £4,404.40 |
| Legal Expenses |
Recommended for Peace of Mind Preference for new policy |
Employment disputes; contract disputes with suppliers; property protection; tax investigations | Contact DAS legal team immediately. Use rradar advice line where applicable for employment matters to reduce excess. Claims must be reported within 180 days of incident. | Part of Commercial Combined Policy |
| Employment Practices Liability |
Recommended for Peace of Mind Preference for new policy |
Unfair dismissal claims; discrimination allegations; harassment claims | Notify insurer immediately. £10,000 excess applies, reducible to £1,000 if rradar advice is sought and followed. Resolution typically takes 3-12 months. | Part of Management Liability Policy |
| Cyber Crime Coverage |
Recommended for Peace of Mind Preference for new policy |
Funds transfer fraud; theft of corporate identity; extortion payment demands | Call incident response line immediately. Report to appropriate law enforcement agencies. £10,000 deductible applies for most cyber crime coverages (£5,000 for extortion). | Part of Cyber Policy |
| Company Legal Liability |
Recommended for Peace of Mind Preference for new policy |
Breach of data protection regulations; corporate manslaughter allegations | Notify AXA immediately. Provide all relevant documentation and cooperate fully with investigation. £5,000 excess applies. Resolution can take 6-24 months. | Part of Management Liability Policy |
| Cyber Liability - PCI Fines & Penalties |
Optional Preference for new policy |
Fines from payment card industry due to data breach affecting customer payment details | Call incident response line immediately. Document all communications with payment processors and card associations. £5,000 deductible applies. | Part of Cyber Policy |
| Media Liability |
Optional Intellectual property infringement claims related to marketing materials; defamation claims Preference for new policy |
Notify insurer immediately upon receiving claim or becoming aware of potential claim. £5,000 deductible applies. Resolution typically takes 6-12 months. | Part of Cyber Policy | |
| Post Breach Remediation |
Optional Preference for new policy |
Security upgrades following a cyber incident | Coordinate with cyber incident manager. Document all remediation costs. Limited to 10% of costs paid for the cyber event or £50,000, whichever is less. No deductible applies. | Part of Cyber Policy |
4. RED FLAGS & REAL-LIFE SCENARIOS
Key Red Flags in Current Coverage
-
Cyber Coverage Exclusion in Management Liability Policy
Your Management Liability Policy specifically excludes cyber liability (Endorsement 178), but you have a separate Cyber Insurance policy. This creates potential overlaps or gaps that should be carefully reviewed. -
Policy Renewal Timing
Several policies appear to have expired or were up for renewal in August 2025. Verification of current coverage status is essential to avoid coverage gaps. -
Flood and Storm Coverage Limitations
Your Commercial Combined policy excludes flood damage and has restrictions on storm damage. This creates a significant gap in coverage for increasingly common weather events. -
Geographical Coverage Limitations
The Marine Cargo policy lists several excluded territories. If your business expands to new markets, coverage may not automatically extend to these regions. -
Record-Keeping Requirements for Products Liability
Your Products Liability coverage includes a condition precedent requiring detailed records of products supplied and suppliers for 10 years. Failure to maintain these records could invalidate coverage.
Real-Life Scenarios
Successful Claims Examples
Case Study 1: Product Liability Claim Success
A pet products manufacturer faced a claim when a customer's dog suffered injuries from a frayed leash. The manufacturer had:
- Maintained batch testing records for all materials
- Implemented ISO 9001 quality management systems
- Kept comprehensive supply chain documentation
- Recorded customer complaints and product returns
Result: The claim was settled within 4 months for £15,000, with legal costs covered by the insurer. The company's excess was limited to £500, and their premium increased by only 5% at renewal due to their robust documentation.
Unsuccessful Claims Examples
Case Study 1: Product Liability Claim Denial
A pet accessory manufacturer faced a £75,000 claim when a consumer alleged a toxic material in a pet bed caused illness. The claim was denied because:
- The company couldn't produce material safety data sheets for all components
- There was no batch testing regime
- The product lacked appropriate warning labels
- No product recall plan was in place
Result: The company faced legal costs of £45,000 over 18 months, eventually settling out of court for £60,000, entirely out of pocket. Their insurance premium doubled at the next renewal due to the uninsured claim.
Case Study 2: Business Interruption Claim Limitation
A retail business suffered significant damage from a water leak. Their claim for business interruption was substantially reduced because:
- Financial records were inadequate to establish pre-incident profit levels
- The business had not updated their sum insured to reflect growth
- They didn't implement mitigation measures promptly as required by the policy
- They failed to maintain an up-to-date business continuity plan
Result: The claim process took over 9 months, and the settlement was 60% lower than anticipated. The business ultimately faced a £120,000 shortfall that had to be covered from cash reserves, severely impacting their recovery.
5. RECOMMENDED TESTS & CERTIFICATES BY PRODUCT CATEGORY
Based on the product categories visible in the Project Blu brochure (including product lines like Goa, Adriatic, Zambezi, Danube, Bengal, and Elbe):
Pet Beds and Soft Goods
| Test/Certificate | Benefit | Potential Premium Reduction |
|---|---|---|
| EN 71-3 (Chemical Testing for Toys) | Verifies products are free from harmful substances. Essential for proving safety in claims involving pet illness/injury. | 5-8% reduction in Products Liability premium |
| REACH Compliance | Documents compliance with EU regulations on chemical substances. Strengthens defense against claims of toxic materials. | 3-5% reduction in Products Liability premium |
| Flammability Testing (BS 5852) | Demonstrates fire safety of materials. Crucial for defending claims related to fire damage. | 3-7% reduction in Property and Products Liability premiums |
| ISO 9001 Quality Management | Demonstrates systematic quality control. Enhances credibility in product liability claims. | 5-10% overall reduction across multiple policies |
| Materials Testing (Tensile Strength) | Documents durability of materials. Essential for defending product failure claims. | 2-5% reduction in Products Liability premium |
Leashes, Collars, and Hardware Items
| Test/Certificate | Benefit | Potential Premium Reduction |
|---|---|---|
| Load Testing Certification | Documents weight capacity of products. Critical for defending claims of leash/collar failures. | 5-10% reduction in Products Liability premium |
| ASTM F2374 (Standard for Dog Equipment) | Demonstrates compliance with recognized standards. Significantly strengthens defense in liability claims. | 7-12% reduction in Products Liability premium |
| Material Testing for Weather Resistance | Verifies durability in various conditions. Essential for defending claims of premature breakdown. | 3-6% reduction in Products Liability premium |
| Recycled Materials Certification | Verifies authenticity of recycled material claims. Protects against false advertising claims. | 2-4% reduction across liability coverages |
Supply Chain Documentation
| Documentation | Benefit | Potential Premium Reduction |
|---|---|---|
| Supplier Quality Agreements | Documents quality standards required from suppliers. Essential for subrogation in claims involving component defects. | 3-8% reduction across multiple policies |
| Batch Testing Records | Enables precise identification of affected products. Critical for limiting scope of potential recalls. | 5-10% reduction in Products Liability premium |
| Third-Party Factory Audits | Verifies manufacturing standards. Strengthens defense against claims of systematic quality issues. | 4-7% reduction in Products Liability premium |
| Certificate of Origin | Verifies source of materials/products. Important for claims involving international shipments. | 2-5% reduction in Marine Cargo premium |
Additional Documentation
| Documentation | Benefit | Potential Premium Reduction |
|---|---|---|
| Product Risk Assessments | Demonstrates proactive identification of potential hazards. Strengthens defense in liability claims. | 5-8% reduction in Products Liability premium |
| Warning Labels and Instructions | Reduces liability for foreseeable misuse. Essential for defending failure-to-warn claims. | 3-6% reduction in Products Liability premium |
| Complaint Handling Procedures | Demonstrates systematic approach to product issues. Important for defending claims of negligence. | 3-5% reduction across liability coverages |
| Product Recall Plan | Shows preparedness for worst-case scenarios. May be required for certain coverages. | 5-10% reduction in Products Liability premium |
6. BENEFITS FOR PROJECT BLU TAKING ADDITIONAL STEPS
Financial Benefits
-
Premium Reductions
- Implementing recommended tests and certifications could reduce annual insurance costs by 5–15% (£700–£2,100 based on current premiums).
- Maintaining comprehensive records as required for products liability can prevent premium increases of 25–50% that typically follow disputed claims.
- Excess reduction on Employment Practices Liability from £10,000 to £1,000 by utilizing rradar advice services represents a potential savings of £9,000 per claim.
-
Claims Efficiency
- Proper documentation can reduce claim settlement time by 40–60%, improving cash flow and reducing interruption to business operations.
- Fast track claims processes (available for cyber claims and marine cargo claims under £5,000) can result in settlement within days rather than months.
- Well-documented quality control processes can reduce the likelihood of claims being denied, avoiding uninsured losses that could exceed £50,000 per incident.
-
Coverage Optimization
- Regular review of sums insured ensures adequate coverage without overpaying premiums.
- Aligning policy renewal dates can simplify administration and potentially unlock multi-policy discounts.
- Identifying overlaps between policies (like between cyber and management liability coverage) can eliminate redundant coverage and reduce costs.
Operational Benefits
-
Risk Reduction
- Implementing recommended testing reduces the actual risk of product failures and associated business disruption.
- Maintaining proper records enables faster and more targeted product recalls if necessary, limiting scope and cost.
- Cybersecurity measures reduce both the likelihood and impact of cyber events, protecting business continuity.
-
Enhanced Claim Outcomes
- Documented quality procedures strengthen your position in liability claims, leading to more favorable settlements.
- Proper record keeping as required by the Products Liability policy improves the chance of successful subrogation against suppliers for defective components.
- Clear business continuity plans maximize recovery under Business Interruption coverage by demonstrating mitigation efforts.
-
Reputation Protection
- Faster claim resolution minimizes negative publicity and customer dissatisfaction.
- Proactive risk management demonstrates corporate responsibility, enhancing brand value.
- Proper insurance coverage ensures financial stability to maintain operations even after significant incidents.
Long-Term Relationship Benefits
-
Insurer Confidence
- Demonstrated risk management leads to more favorable policy terms over time.
- Proven quality control can justify higher limits of indemnity at lower premium rates.
- Established history of proactive risk management can lead to broader coverage with fewer exclusions.
-
Business Resilience
- Comprehensive insurance portfolio aligned with actual business risks creates financial stability.
- Documented procedures build institutional knowledge that survives personnel changes.
- Regular review of coverage ensures adaptation to evolving business models and emerging risks.
-
Competitive Advantage
- Superior risk management can be highlighted in marketing materials and tenders.
- Appropriate certifications may open access to more demanding retail channels and markets.
- Financial stability from proper insurance coverage provides confidence to pursue growth opportunities.
By implementing these recommendations, Project Blu can achieve substantial cost savings while simultaneously strengthening protection against business risks. The investment in proper testing, certification, and documentation yields returns through both reduced insurance costs and improved claim outcomes, creating a more resilient business model in the competitive pet products market.