Contingent business interruption and other special covers
What happens to a business after a fire? Production slows down or stops and turnover decreases, profits begin to diminish and eventually turn into losses as wages and other charges continue to accrue.
What happens, though, if goods or services cannot be supplied because of material damage at the premises of a supplier or, perhaps even worse, after a fire on the premises of an important customer? While a previous Swiss Re business interruption publication (1998) addressed major BI characteristics, it touched only briefly on special issues. This new publication, then, aims to probe BI specialities which have become increasingly important over the past few years.
In today’s ”global village“, business processes in industry and commerce form a chain of interrelated activities by highly diverse, but interdependent parties. Technological progress is moving at tremendous speed. Insurance markets and insurance products could hardly stagnate in this ever-changing environment.
The publication examines the complex area of contingent BI cover before going on to explain Swiss Re's Information Systems (ISBI) policy, contingency covers where non-physical damage triggers the loss, advance loss of profits (ALOP) insurance and liquidated damages covers. Finally, three annexes offer additional insights into specialised areas, including the risk management process with external dependencies, the electronic supply chain and BI in livestock production. In summary, this publication outlines the problems which confront underwriters handling special business interruption covers and offers solutions to underline Swiss Re’s decisive strategy.
