Swiss Re Corporate Solutions and PARIMA have turned to experts at Crawford Global Technical Services® as they seek to understand and improve insureds’ business interruption claims experience.
The global reinsurer and PARIMA (Pan-Asian Risk and Insurance Management Association) have partnered to produce a detailed report addressing the difficulties corporates often have in selecting an adequate business interruption (BI) coverage and the “costly surprises that can arise during the claims process when BI isn’t arranged properly”.
The report, ‘Shining a light on Business Interruption’ found that common areas where clients struggle include identifying vulnerabilities and maximum probable loss, selecting the right maximum indemnity period and the calculation of insured “gross profit”.
Scott Reichelt, director of Crawford Global Technical Services Asia, provided key technical advice to the report authors. He explained:
“It’s certainly the case that major incidents like the Tianjin explosion in 2015 or the flooding in Thailand four years earlier created some significant BI challenges for corporates. This report is an excellent insight into the lessons learned from such cases,” says Scott.
“Above all, it proves that sound risk management practices and robust business continuity planning can have a significant impact on how and whether your business is able to rebound after a disruption and can help avoid lengthy claims settlement disputes. I’m delighted to have been able to help Swiss Re Corporate Solutions and PARIMA in producing a report that shows how some important lessons have been learned.”
Risk managers and corporate insurance professionals consistently identify business interruption (BI) as the major concern facing their business today. The report includes a number of case studies exploring some common challenges clients face when working out their business interruption cover, particularly in the wake of a number of recent large losses.
The report states: “Typically the BI proportion of a property claim will account for the majority of the loss, and will commonly exceed USD 100 million – in some cases even reaching USD 1 billion. This trend we see of increasing BI losses is due to factors such as more complex global supply chains and large-scale production equipment, interdependency risks and just in time inventory. This is further exemplified with emerging risks such as disruptive technology and the Internet of Things (IoT).”
You can download a copy of the report here – https://corporatesolutions.swissre.com/insights/knowledge/lessons_learnt_in_business_interruption.html