RIMS Supply Chain Brain

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Supply Chain Brain
Avoiding Pitfalls of a Contingent
Business Interruption Loss
Recording of this session via any media type is strictly prohibited.
Page 1
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
Recording of this session via any media type is strictly prohibited.
Page 2
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.
Recording of this session via any media type is strictly prohibited.
Page 3
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
Recording of this session via any media type is strictly prohibited.
Page 4
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
Recording of this session via any media type is strictly prohibited.
Page 5
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
Recording of this session via any media type is strictly prohibited.
Page 6
Transfer Supply Chain Risk
• Contingent business interruption / dependent time element
insurance
• Supplier contracts – insurance / liability
Recording of this session via any media type is strictly prohibited.
Page 7
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
o
Physical damage
Covered perils / All risk
• Potential coverage for multiple tiers of supply chain
disruption
o
o
o
Direct v. indirect suppliers and/or customers
Named v. unnamed suppliers and/or customers
Tier 1, Tier 2, etc.
Recording of this session via any media type is strictly prohibited.
Page 8
Contingent Business Interruption
Insurance Coverage (cont’d)
• Understand applicable sublimits and deductibles
o 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 causation
o Lack of information from suppliers
o When to give notice to insurers
o Maintaining privilege during coverage investigation
Recording of this session via any media type is strictly prohibited.
Page 9
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
damage
o Stores were impacted by flood damage, wind damage,
service interruption and civil authority
Recording of this session via any media type is strictly prohibited.
Page 10
Measurement and Documentation
Challenges
• Measurement issues
o Allocation of losses by causation
o Indemnity periods
o Wind vs flood
• Documentation issues
o Systems do not align or provide level of detail being requested to
support the loss
o Lack of information from suppliers
o Historical data not maintained
Recording of this session via any media type is strictly prohibited.
Page 11
Storm Surge Mapping Software
Recording of this session via any media type is strictly prohibited.
Page 12
Questions, Final Comments and
Contact Information
• Frank Huyberts - [email protected]
• Allen Melton – [email protected]
• Brad McCloskey – [email protected]
Recording of this session via any media type is strictly prohibited.
Page 13
EVALUATION INFORMATION /
MOBILE APP
Please complete the session survey on the RIMS14 mobile application.
Recording of this session via any media type is strictly prohibited.
Page 14
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