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Business Continuity Plans can be good for your insurance

The Business Continuity Institute (BCI) has published its report into the link between good Business Continuity Plans and Business Interruption (BI) insurance. The publication follows a recent roundtable discussion that featured representation from AXA, Zurich, the Chartered Institute of Loss Adjusters, AIRMIC (Association of Insurance & Risk Managers), Marsh and the BSI (British Standards Institute).

The meeting concluded that Business Continuity Management (BCM) could bring benefits in five key areas:

  1. BCM was seen by insurers as a means to improve the quality of the business they are underwriting and confirmed that BCM helps organisations mitigate impact, recover faster and minimise losses.
  2. BCM can be used to protect against losses incurred through traditionally non-insurable perils such as supplier insolvency or pandemic influenza.
  3. BCM can be used to better understand the requirements for BI cover (and potentially lower the amount of cover needed).
  4. BCM can help obtain BI cover where otherwise it would not be available.
  5. BCM can help to secure optimal terms for cover.

The BCI initiated this meeting to establish a common understanding between business continuity practitioners and insurers writing cover for BI insurance on the benefits of a good BCM programme. The BCI was keen to establish clarity on five points:

  1. What is the BCM link to Business Interruption insurance?
  2. What do insurers look for?
  3. What difference will a BCM programme make to the insurance terms provided?
  4. How should a BCM manager connect and communicate with insurance buyers in their organisation?
  5. What does the BCM manager need to do? (or, why is their plan not being recognised?)

Lyndon Bird FBCI, the BCI’s Technical Director, commented:

“The link between insurance and business continuity has been discussed for many years, but for the first time we have been able to establish a clear baseline understanding with sector leaders. Now that BCM is an established global discipline and the BCI’s certification scheme has been embraced by practitioners around the world, there is a new opportunity to recognise the benefits that such quality-assured programmes can bring to insurers when considering the terms and price of business interruption insurance.

“We are looking forward to broadening involvement in the discussion as well as addressing specific action areas such as the education of risk managers and underwriters on the positive impact of BCM and what ‘good BCM’ looks like.”

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