German business needs greater cooperation to secure resilience and supply chains

Dr Martin Wansleben, CEO of the Association of German Chambers of Industry and Commerce (DIHK), addressed the difficulties experienced by the corporate sector in obtaining insurance, set against the challenges facing insurers in providing the required cover, at the GVNW Symposium late last week

By way of example, he referred to a company that had incurred €4m in material damage following July’s flooding in Germany.

The company is located by a small river. As a result, the insurer applied exclusions to its insurance cover.

Discussions are now ongoing as to whether the company was insured for July’s loss event. Assuming it isn’t covered, Dr Wansleben explained what that means in business terms.

Not having insurance means the owner can’t access the financing he needs to make the business operational again.

Moreover, this company supplies major enterprises. If it is not operational for an extended period, the other companies will incur bottlenecks, leading to reduced productivity and turnover and, in the longer term, alternative arrangements with other suppliers.

In order to resolve this unwanted situation resulting from a lack of insurance capacity, Dr Wansleben argued that “a range of measures are needed resulting in adequate risk management”. He added that the state should also intervene in some situations.

Moreover, Dr Wansleben emphasised the importance of cooperation, not only between insurers, their clients and the government, but also at international level.

He mentioned the economic fallout caused by the Covid-19 pandemic playing havoc with international supply chains, to illustrate this point. Corporate balance sheets in Germany are not as strong as they were pre-Covid, he said.

Dr Wansleben also noted that confidence doesn’t appear to have returned to the German business community, given the current low demand for loans to finance investment.

He therefore called for cooperation at an international level to make the economy more robust in the face of such crises, saying: “We have to build a bridge between German business… and European policymakers in order to contribute towards improving the feeling of security and, at the same time, decreasing the feeling of insecurity in the German economy.”

Dr Wansleben stressed that mutual dependency means all economic players and international bodies have to work together to reduce their susceptibility to sudden, hard-hitting catastrophes.

In keeping with this strategy, the DIHK is now “aiming to integrate the fluctuation risks and the risks of the perceived greater unpredictability of events in our value creation process, our thoughts and our actions”, he commented.

Dr Wansleben also argued that the pre-Covid ways of doing business have been exposed as obsolete in some ways. That means change is needed. “We are now coming into a new type of cooperation culture,” he said.

Moreover, ignoring these issues is not the answer, he said. It’s time to realise that business isn’t just about coming first anymore. Cooperation is essential so insurers can provide the cover that companies need and to improve the resilience of international supply chains, he concluded.

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