Gaps in Business Interruption cover plus inaccurate valuations are resulting in less than optimal coverage for clients and warrants modernisation, according to a new report by Marsh
The report, titled Business Interruption Insurance Efficacy: Five Key Issues
, is based on concerns raised by colleagues, clients, loss adjusters, lawyers and insurers.
It focuses on five core areas where Marsh
believes improvement is required: insured values; indemnity periods; wide area damage scenarios; supply chain; and claims.
As firms become more exposed to major disasters and subsequent business interruptions as a result of their increasingly complex global networks, the shortcomings of traditional property damage/business interruption insurance policies have become more and more evident.
These policies were never designed to meet the risks faced by organisations today, the company said, and the business interruption insurance market has not kept pace with these rapid changes.
Caroline Woolley, global leader of Marsh
’s Business Interruption Centre of Excellence, said: “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.”
Read the report here