Trade body calls for better understanding of supply chain risks
The Lloyd’s Market Association (LMA) is reviewing how the market writes contingent business interruption (CBI) cover after last year’s natural catastrophes.
CBI insurance pays out for lost profits and additional expenses following business interruption at the premises of a supplier or customer.
The review is examining the quality of data held by the market on CBI risks and how underwriters monitor their aggregations and exposures in this area.
The LMA said that the recent chain of natural catastrophes had highlighted the need for underwriters to properly understand their clients’ supply chain risks.
The trade body added that the increase of the ‘just in time’ supply chain model meant that disruption to suppliers’ businesses from catastrophes could have serious knock-on impacts.
LMA head of underwriting Neil Smith said: “What we’re trying to do is help contingent BI insurers to understand their exposures better by producing a model questionnaire that clients can complete at the point of inception to ensure underwriters get the information they need.”
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