Marsh sets out a roadmap for modernising business interruption insurance
- Published: Friday, 03 April 2015 13:18
Risk management and risk transfer must work together to make organizations more resilient, as firms become more exposed to major disasters and subsequent business interruptions as a result of their increasingly complex global networks. Traditional property damage/business interruption policies were never designed to meet the risks faced by organizations today, and the business interruption insurance market has not kept pace with these rapid changes, according to Marsh.
In a new Marsh Risk Management Research report, the firm highlights how the limitations of existing business interruption insurance, including gaps in cover and inaccurate valuations, are resulting in less than optimal coverage for clients and makes the case for insurance modernisation.
Based on concerns raised by colleagues, clients, loss adjusters, lawyers and insurers, the report focuses on five core areas where Marsh believes improvement is required: insured values; indemnity periods; wide area damage scenarios; supply chain; and claims.
Caroline Woolley, Global Leader of Marsh’s Business Interruption Center of Excellence, commented: “A property damage event remains one of the major exposures any company can face, and business interruption is one of the main insurances purchased. Business interruption policies, however, have done little to evolve since the middle of the last century.
“The insurance industry needs to acknowledge the shortcomings of existing business interruption cover and build a better solution for buyers. This report is Marsh’s contribution to the debate as we seek to improve existing solutions and reshape the industry to address insurance buyers’ evolving needs.”
The report ‘Business Interruption Insurance Efficacy: Five Key Issues’ can be found after registration here.