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‘Business Interruption Insurance & BCM’

A new guide published by the Business Continuity Institute (BCI) aims to help clarify the complementary relationship between business continuity management and business interruption insurance (BII).

The guide for business continuity and risk management professionals was developed by practitioners and industry experts over a 12-month project, involving a number of discussions with major writers of business interruption insurance.

Key conclusions from the guide:

• Business continuity management can help with BII because it reduces risk as well as the scale and duration of losses.
• Business continuity management is a factor in BII because it can affect the Estimated Maximum Loss (EML). So long as you are able to calculate an improved EML, you have a strong case to argue for improved terms of cover.
• Premium savings of up to 15 percent have been achieved by some organizations from some insurance providers; however there is no fixed discount rate on BII in reward for adequate Business continuity management programmes. Rating for BII still lacks a common or formalised approach across the industry.
• Within BII discussions, business continuity management can be used to help understand what the loss of profit and increased cost of working could be. It also provides cover whenever policies impose deductibles in time or money, and where the policy does not respond to the perils encountered.
• Business continuity management is good for insurers – clients with BCM represent a better quality risk. Insurers need to think about their BII exposures especially when considering their capital adequacy arrangements as required by Solvency II.

The guide is available to download from the BCI after registration.

•Date: 10th March 2011 • Region: UK/World •Type: Article •Topic: BC general

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