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Supply Chain Brain. Avoiding Pitfalls of a Contingent Business Interruption Loss . Speakers Frank Huyberts, Manager - Claims Administration, General Motors Allen Melton, Partner, Americas Leader - Insurance Claims Services, EY - PowerPoint PPT Presentation
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Recording of this session via any media type is strictly prohibited.
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Supply Chain Brain
Avoiding Pitfalls of a Contingent Business Interruption Loss
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Recording of this session via any media type is strictly prohibited.
Speakers
• Frank Huyberts, Manager - Claims Administration, General Motors
• Allen Melton, Partner, Americas Leader - Insurance Claims Services, EY
• Brad McCloskey, Senior Manager - Insurance Claims Services, EY
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What to Expect
After attending this session you should know how to assess supplier risk, proactively manage supply chain risk, and understand coverage and documentation requirements to support a contingent business interruption loss.
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Pitfalls to Avoid
• Lacking knowledge and/or visibility on the complete supply chain
• Not having full understanding of CBI coverage and its application
• Assuming systems are set up to capture or maintain documentation that will be needed to support CBI loss
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Assess Supplier Risk• Number of suppliers
o How well do you know and understand your Tier 1 and/or Tier II suppliers
• Risk profile of key suppliers and potential loss scenarios
• Specialization of items supplied• Geographic dispersion of suppliers• Ability to resource parts within a supplier’s own
network• Supplier capacity utilization – available excess
capacity
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Manage Supply Chain Risk
• Proactively identify potential risks and loss scenarios• Monitor key supplier business continuity planning
process – test it• Build in redundancy to suppliers or within a supplier
o Time needed to qualify new suppliers
• Increased inventory of key components
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Transfer Supply Chain Risk
• Contingent business interruption / dependent time element insurance
• Supplier contracts – insurance / liability
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Contingent Business Interruption Insurance Coverage
• Usually part of a broader property policy• Typically provides coverage for the interruption or suspension
of an insured’s business operations as a result of physical loss or damage to the property of a supplier, customer, etc.o Physical damageo Covered perils / All risk
• Potential coverage for multiple tiers of supply chain disruptiono Direct v. indirect suppliers and/or customerso Named v. unnamed suppliers and/or customerso Tier 1, Tier 2, etc.
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Contingent Business Interruption Insurance Coverage (cont’d)
• Understand applicable sublimits and deductibleso Different sublimits and deductibles may apply for different tiers and
locations• Typically provides coverage for both business interruption and
extra expense• Coverage issues
o Concurrent causationo Lack of information from supplierso When to give notice to insurerso Maintaining privilege during coverage investigation
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Fact Pattern• Snack maker that sells product through grocery
stores and convenience stores• Hurricane causes extensive widespread damage to
multiple states where you sell your product• Several hundred stores are impacted• Policy only covers CBI losses as a result of physical
damageo Stores were impacted by flood damage, wind damage,
service interruption and civil authority
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Measurement and Documentation Challenges
• Measurement issueso Allocation of losses by causationo Indemnity periodso Wind vs flood
• Documentation issueso Systems do not align or provide level of detail being requested to
support the losso Lack of information from supplierso Historical data not maintained
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Storm Surge Mapping Software
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Questions, Final Comments and Contact Information
• Frank Huyberts - [email protected]
• Allen Melton – [email protected]
• Brad McCloskey – [email protected]
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EVALUATION INFORMATION / MOBILE APP
Please complete the session survey on the RIMS14 mobile application.
