Business Continuity Blog

John Basinger shares his thoughts on the role of Business Continuity Planning in insurance.

How can Business Continuity Planning support setting the correct Business Interruption cover?

Posted by John Basinger on January 26, 2018

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I recently picked up on a study produced jointly by Swiss Re and Parima, entitled Lessons Learned in Business Interruption. The study deals with BI issues in the Far East but the principles are relevant for the rest of the world. Their conclusion is that Business Continuity Planning has a massive role to play in enabling the insurance broker to assist their client in getting the correct level of BI cover.

A large part of Inoni’s business comes from the insurance market, with Insurers increasingly requiring their commercial policyholders to have a Business Continuity Plan in place, principally to manage their Business Interruption exposure.

The article provides claims case studies highlighting real life cover issues which have led to underinsurance and in some cases to there being no BI cover being in place whatsoever. They also provide a great checklist of things to consider in selecting the appropriate level of BI cover.

The BCP process enables a detailed analysis of our clients’ business, which produces:

  • Continuity Risk Register, identifying the various scenarios which can cause the demise of the business.
  • Business Impact Analysis (BIA) – mapping the customers’ tolerances to business outage, thus setting out the timescale for recovery before they turn to the competition
  • Business Recovery Plan – incorporating Emergency Response, Crisis Management and Business Recovery.

By the end of the project, the client has a very clear picture of their business resilience (or lack of), how long it may take to recover to their pre-loss trading position, how they will respond and who needs to be involved.

The process therefore provides an objective basis upon which to calculate:

  • Maximum Indemnity Period
  • Full range of perils
  • Policy extensions – e.g. customer, supplier or utility due to degree of dependence identified.
  • Risk improvements – e.g. improved IT and data security, duplication of key supplies, spread of stock across locations.

The continuity review, risk management and business recovery elements of the BCP dovetails with the insurance programme of any business. The analysis ensures that the correct Business Interruption cover is in place and provides comfort to the business owner, their staff and insurers that they can manage their risks and respond to a range of identified loss scenarios.

Inoni provides a business continuity consulting service that elevates clients to a best practice position quickly, affordably and with minimum disruption. Our launch pad is a series of practical but intensive workshops, teaching them all they need to know whilst learning what makes the organisation tick. Using the data we collect, we’ll create their baseline business continuity capability, walk them through it and then support them on their journey to resilience.

Please visit our website www.inoni.co.uk to learn more about us. You can also access BCP Templates, Blueprints and Webinars.

I will be returning to this subject to look in more detail about common issues we identify in relation to BI cover and continuity risk exposure in its widest sense.

Tags: Business Continuity Management, Insurance