Insurers 'likely to restrict' contingent BI cover
WTW's latest Global Supply Chain Risk Report finds a large insurance gap for supply chain risk, with less than one in five businesses having specific insurance to cover business interruption risk in their supply chain
Supply chain risk insurance market is becoming increasingly difficult as carriers review their exposures, WTW says
Insurers are likely to restrict their cover for contingent business interruption caused by supply chain property damage, WTW said.
The international broker said the market for supply chain risk insurance was becoming “increasingly difficult” and carriers were looking to limit their exposure. “Insurers are reviewing their exposure and are likely to restrict cover further in the coming year,” WTW said in its 2023 Global Supply Chain Risk Report.
It added insurers would be concerned about minimising exposure to accumulated business interruption claims in cases where suppliers worked for many companies within the same sector.
WTW also identified a large insurance gap for supply chain risk, finding less than one in five businesses had specific insurance to cover business interruption risk in their supply chain.
The broker polled 800 executives and heads of risk in large companies and found just 17% of firms had cover specifically for their supply chain, while just 53% said they believed they were covered by other insurance.
Only 25% of the businesses polled said they felt confident they had sufficient cover for the impact of extreme weather on their supply chain.
Hugo Wegbrans, global head of broking at WTW, said this represented a growth opportunity for the insurance industry. “Major coverage gaps were exposed by the pandemic, and companies remain un- or underinsured,” he said.
“Businesses in all sectors need to transfer their significant exposures to achieve true resilience,” he added.
