Marsh calls for collaborative effort to finally solve BI risk transfer problems

Marsh said clients would eventually like to see BI exposures covered in an all risk policy. But in order to achieve that nirvana it believes stakeholders first need to remedy shortfalls in existing BI-related lines of insurance. It has therefore produced a research paper on property damage/business interruption (PD/BI) insurance as a starting point for clearing up buyer concerns over the efficacy of risk transfer solutions. According to Marsh, traditional property damage/business interruption policies were never designed to meet the risks faced by organisations today. The business interruption insurance market has not kept pace with these rapid changes, it said.hide"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," said Caroline Woolley, Global Leader of Marsh's Business Interruption Center of Excellence. "The insurance industry needs to acknowledge the shortcomings of existing business interruption cover and build a better solution for buyers," she added. "Something needs to be done about this," said Ms Woolley. "We want to reshape BI insurance.” Marsh said there are many BI risk transfer issues that need to be tackled. However, following discussions with brokers, clients, loss adjusters, lawyers and insurers its Business Interruption Insurance Efficacy: Five Key Issues report lays out areas that Marsh has prioritised for improvement. These are insured values, indemnity periods, wide area damage scenarios, supply chain and claims. The broker said at a press briefing that there is a need for all stakeholders to work together to create some comfort for buyers of BI insurance. "We need everyone's help to get this right, a collaborative approach is needed," said Ms Woolley. "No one likes surprises, including insurers," she pointed out. "We need to ensure that information is shared in order to pave the way to develop new solutions that fit the new risk environment." She said insurers are starting to recognise the need for change and show willingness to develop solutions. "We are starting to see some of them listening," she said. Ms Woolley explained that Marsh's new report is just a starting point on the road to better BI coverages. "We have identified these issues and have identified the limitations of the policies. Most stakeholders are aware of these issues but we want to deal with them once and for all. We want to create some certainty in cover and develop new, relevant solutions." BI risks are wide and varied and existing insurance covers exists in many lines of insurance including property, cyber, supply chain, product recall and terrorism. Marsh noted that clients don't want many different policies to cover differing BI exposures and in the long-term would like to see an all risk BI cover available. However, in the meantime Ms Woolley said risk managers and risk transfer partners have to start improving the policies and coverages already in the market. "We have a long-term vision of where we want it to go but have to take it step-by-step," said Ms Woolley.

Marsh calls for collaborative effort to finally solve BI risk transfer problems

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