W W W . C H I C A G O L A N D R I S K F O R U M . O R G
A Panel of Experts
Clearing the Confusion – The Importance of BI Value Reporting
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The Business Interruption Wording Review Report by the Chartered Institute of Loss Adjusters – Key Issue – Getting the Values Right
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The Panel
• Bob Brix - Chubb – PMM Practice Leader – Property & Machinery Breakdown – [email protected] –
312-529-6897 • Jennifer Gavelek – Mesirow Financial
– Senior Vice President, Producer – [email protected] – 312-595-7252
• Amy Scheiden – Inland Risk & Insurance Management – Assistant Vice President Claims and Loss Control –
[email protected] – 630-218-8000 • Drew Olson – BDO Forensic Insurance & Recovery
– Director – [email protected] – 312-233-1826
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Guidance on Standard Businesses
• Reporting forward-looking 12 months of business interruption value – Take into consideration any expected sales growth (decline) in the
business.
• Report profit plus continuing expenses (most insureds start with revenue and deduct variable expenses)
• All semi-variable expenses (utilites, repairs, etc.) should be considered as 100% insured in the declarations.
• Essential/non-essential employees identified and reported in accordance with any ordinary payroll limitations (i.e. 90 days)
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Non-Standard Businesses
• Financial Institutions • Technology Companies (data
center driven businesses – we are in the cloud)
• Businesses with products with longer revenue streams (e.g. printers, jet engines, cell phones)
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Coinsurance
• What’s the point? – Helps to guard against the moral hazard that the policyholder will not
purchase sufficient insurance to cover a total loss in order to save money on insurance premiums.
• How common is it? – For US policyholders we see the coinsurance clause being waived but the
waiver has to be requested.
• Why do I need to worry about it? – While not as common in the US, many local foreign policies still have the
provision and can limit coverage if not reported appropriately.
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Extra Expenses
• Pure extra expense versus mitigating extra expense (expense to reduce the loss)
• Sublimit versus a part of the time element coverage
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Contingent Time Element
• What about my suppliers and customers exposure to my business?
• What is my responsibility to my insurers?
• What do I need to report?