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Insuring Continuity

Insuring Continuity. Integrating the BC Program with Traditional Insurance. Session Objectives. Discuss types of insurance relevant to BCM programs Demonstrate how BCM can benefit from insurance programs Demonstrate how insurance programs can benefit from the BCM program.

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Insuring Continuity

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  1. Insuring Continuity Integrating the BC Program with Traditional Insurance

  2. Session Objectives • Discuss types of insurance relevant to BCM programs • Demonstrate how BCM can benefit from insurance programs • Demonstrate how insurance programs can benefit from the BCM program

  3. Insurance Overlap with BCM • Business Interruption • Property • Directors’ and Officers’ • Workers’ Compensation/General Liability • Professional Liability

  4. Business Interruption Insurance • Business Interruption Defined: • Thesaurus Legend: Noun 1. business interruption insurance - insurance that provides protection for the loss of profits and continuing fixed expenses resulting from a break in commercial activities due to the occurrence of a peril • Business Interruption Purpose:To protect the earnings of the insured and do what the insured would do for itself had no loss occurred. • Business Interruption:“Net Profits Plus Continuing Expenses” or “Gross Earnings less non-continuing expenses”

  5. Section 1: BI Program Design Business Interruption Coverages Services Overview

  6. Section 1: BI Program Design Business Interruption Basics Services Overview • Types of policy forms • ISO Filed Forms • Manuscript/Broker Tailored Form • Propriety/Insurance Company form • Basis of coverage: • Gross Earnings: “Gross Earnings less non-continuing expenses” or • Net Profits: “Net Profit plus continuing expenses” or • “Reduction in Turnover less change in standing charges.” • Conditions: • Covered cause of loss • Covered location • During period of indemnity • Mitigation • Actual loss sustained

  7. Section 1: BI Program Design Services Overview

  8. Insurance can help BCM • Cash to implement strategies • At time of disaster or execution portions of staged strategies • Contingent coverage • Current risk information • Basis for MFL/PML • Exposures revealed in BIV analysis

  9. Insurance can help BCM • Backstop for losses/failed responses Deductible Strategy Funding Self Insurance Excess/Reinsurance

  10. BCM can help insurance • What doesn’t work: • Putting insurance salesmen in your mass notification system

  11. BCM can cover BI “Gotchas” Services Overview Section 1: BI Program Design • Earnings loss scenarios which may not be covered by business interruption insurance (sample): • Obvious exclusions (strikes, war, flood, etc.) • Obscure exclusions (loss of market, no physical damage, consequential losses, etc.) • Examples: • 9/11 losses with no physical damage • Katrina losses – effects on population vs. damage (market) • Northeast power blackout of 2003 • Offshore property exclusion • Pandemic • Human impact, Loss of Life

  12. BCM can cover BI “Gotchas” Services Overview Section 1: BI Program Design • Earnings loss components which may not be covered by business interruption insurance (sample): • Obvious exclusions (BI loss stemming from - mold, flood) • Obscure exclusions (loss of market, retraining employees, consequential loss, etc.) Examples: • Pre-loss excess labor to expedite goods production in advance of loss • Mitigation expenses incurred but not utilized • Excess fuel costs stemming from Katrina • Disaster bonuses, employee tips • Broader market impact • Excess bad debts stemming from Katrina

  13. Actual Example of BCM helping Insurance

  14. You know you might need a professional BIV if… • What to include as a deduction for purpose of getting to gross earnings • (avg. daily value deductible or co-insurance reporting) • The policy has location based limits based on the BIV worksheet • Extended interruption is a possibility for some locations

  15. Contact me at: Michael Keating, CBCP Michael.Keating@NavigantConsutling.com 404-575-3843 LinkedIn: http://www.linkedin.com/in/michaelkeating Questions?

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