3 Ways to Ease the Business Interruption Claims Process
Two in five businesses have suffered a business interruption loss in the last five years, according to the 2017 RIMS Business Interruption Survey. The biggest challenge for companies managing these business interruption (BI) claims: Accurately quantifying their losses.
Whether stemming from natural catastrophes, supply chain disruptions, cyber risks, or other factors, BI claims are among the most important for organizations to resolve. But effectively managing these claims — including maximizing your insurance recovery — requires a clear strategy.
Here are three steps you can take to more efficiently and effectively resolve your next BI claim.
Accurate Pre-Loss Values
Proper values and limits are critical to a successful recovery. And your potential BI loss could be far greater than the property damage sustained in the event. Setting up an effective BI insurance program requires an in-depth risk assessment of your business, its operations, and how a BI loss can impact your bottom line. Among other factors, you should consider your supply chain interdependencies, redundant capacity, changing customer demands, and market trends.
Once you have the results of this assessment, you can calculate your BI value at risk and make smarter decisions about how much insurance coverage to buy, appropriate indemnity periods, and any necessary coverage extensions. Following a loss, you can more effectively allocate internal resources and formulate mitigation steps based on your specific needs — .for example, temporarily shifting manufacturing to alternate plants, using third-party manufacturers, or relocating staff during renovations.
Create a Support Network
Before a loss, you should build a team of operation managers, forensic accountants, property claim advocates, claim project managers, controllers, engineers, and others. Many insurance policies contain professional fees coverage specifically for the use of these resources in the preparation and resolution of insurance claims.
After a loss, you can activate these resources to help you:
- Determine the total impact of a loss to your operations.
- Plan for the resumption of operations.
- Detail your losses.
- Calculate how much revenue was potentially lost
- Present your financial impact calculations to insurers.
Build a Response Team
Beyond managing the insurance process, after a loss you’ll need to answer several questions. How is our supply chain holding up? Do we need to replace any specialized equipment? How can we ensure safe and clean working conditions for our employees?
A response team — established before a loss — can help you address these and other issues. With proper training and testing, this team can quickly mobilize and access the right resources to help you more quickly return to normal operations.
For more information on how Marsh is #ReimaginingRisk at #RIMS2017 and our plans for the conference — including educational sessions, panel discussions, roundtables, and more — visit www.MarshatRIMS.com.