SME BUSINESS INTERRUPTION WEBINAR SERIES

Transcription

1 SME BUSINESS INTERRUPTION WEBINAR SERIES Webinar 1 What does Business Interruption cover mean to your customers Chris Graves National Underwriting Manager - SME March 2016

2 WEBINAR SERIES - OBJECTIVES At the end of this webinar series we would like to create awareness around: What Business Interruption cover is & why it is important for SME clients The various options available to insure Business Interruption (including additional benefits) and considerations to help select the most appropriate cover for your client Understand how Business Interruption indemnifies a business What some of the most common mistakes are in setting (or not setting) up Business Interruption cover The materials we have available to help explain the need of Business Interruption to your clients

3 WEBINAR SCHEDULE Webinar 1: What does Business Interruption cover mean to your clients Date 30 March 2016 Webinar 2: Understanding the CGU SME approach on Business Interruption Date 27 th April 2016 (Tentative) Webinar 3: Understanding the claims process Date Mid May (Tentative) Webinar 4: Common mistakes made in Business Interruption/How can CGU help Date Early June (Tentative)

4 TODAY S OBJECTIVES At the end of this Webinar we would like to create awareness around: Some of the key statistics you may not know about Business Interruption Why Business Interruption is important to your customers Share feedback from our customers on the impact of interruption Most common triggers for a Business Interruption claim Some of the key issues which can adversely impact, or extend the length of time a business is interrupted.

5 WHY THE NEED? Results from CGU survey of SME businesses Impact of Business Interruption No impact 38% 23% 14% 25% Business could not survive Struggle & threatened survival Struggle in the short term 5

6 WHY THE NEED? Results from CGU survey of SME businesses Some businesses are seasonal and have busier and quieter periods in the year. If your business had to shut down during a busy time, would the impact on your business survival be worse or no different than before...? Where previously we found one in four businesses surveyed (25%) did not believe they would survive if they had to shut down for three months. This increased to at least 38% if the shut down occurred during a busy (peak) period in the year. Seasonal Impact on Survival 48% 52% No different Worse 6

7 WHY THE NEED? Results from CGU survey of SME businesses Over one in two businesses surveyed (57%) said they experienced some form of interruption to their business in the past 12 months. Only 23% of businesses surveyed actually had Business Interruption insurance 7

8 WHY THE NEED? Results from CGU survey of SME businesses Perceptions of the impact a shutdown would have on the business were slightly more positive for very small businesses and for larger businesses. Businesses employing under 20 staff, or those with only part time staff were the least positive about business prospects in the event of a prolonged shutdown. 8

9 WHY THE NEED? Business survival rates for companies without Business Interruption Studies indicate that as many as 9 out of 10 businesses that suffer a major interruption and do not have Business Interruption will shut down within 3 years of that interruption Conversely those business with adequate Business Interruption cover tend to have survival rates at, or better than industry average. 9

10 WHY THE NEED? Customer feedback after a loss 10

11 TRIGGERS FOR BUSINESS INTERRUPTION What Damage can trigger a claim?

12 TRIGGERS FOR BUSINESS INTERRUPTION What sort of damage can trigger a claim? (Based on CGU claims data) Cause of Loss 9% 8% 11% 3% 4% Fire Impact Malicious Damage 10% Storm, Hail, Lightning & Flood Bursting, Leaking, Overflow Pipes 8% 10% 37% Accidental Damage Burglary & Theft Glass Breakage All Other Triggers

13 IT S NOT ALWAYS ABOUT THE CATASTROPHES & BIG FIRES! CGU Blog

14 DAMAGE TRIGGER / REINSTATEMENT Machinery Specialised Machinery - many businesses are reliant on unique or key machinery to operate, issues that may impact a businesses profitability from this include: Damage to an individual item may create a production bottle neck. Some machinery can very easily be damaged (ie water leakage, smoke damage, minor impact etc) In some cases such items are not off the shelf & need a reasonable lead time to replace. Customers may demand work still be completed which may be reliant on hiring of alternative items or outsourcing which can be costly. 14

15 DAMAGE TRIGGERS / REINSTATEMENT Buildings Factors to consider: Time to carry out demolition and or removal of debris particularly on difficult to access sites. Is the building heritage listed? Are materials hard to source? Amount of time required for council approval Compliance with new regulations Large scale catastrophe events may delay repair due to contractor shortage 15

16 DAMAGE TRIGGERS / REINSTATEMENT Stock Factors to consider: Some stock can be very easily damaged (ie water damage, smoke/soot, accidental breakage) Lead time to replace can vary. Some stock can be seasonal & or quickly out of date Sourcing of similar replacement stock could be at an increased cost if you need to replace urgently Profit margin can be eroded in selling damaged stock 16

17 TRIGGERS FOR BUSINESS INTERRUPTION Contingent exposures Extra covers and additional benefits include: Human infectious disease Prevention of access Loss of attraction Utilities Customers and suppliers 17

18 CUSTOMER / COMPETITOR BEHAVIORS What we have found after a loss The buying behavior of loyal customers can be changed in a short period of time. Competitors will actively target customer base with promotions. Competitors may poach key staff or key staff may move on elsewhere with customers following the staff Customers may not tolerate a long outage & will move to a competitor. Winning back the customer can take time (particularly if you have limited customers to begin with). In a competitive market most SME businesses do not have the cash flow to sustain a long period of lower than expected turnover 18

19 WHY TAKE BUSINESS INTERRUPTION COVER Business Interruption Insurance can assist your client with the following Maintain cash flow while they rebuild/reinstate damage property Assist with winning back lost customers Allow them to retain key staff Funding of loss mitigation measures Provide protection from contingent exposures not directly associated with their own premises

20 NEXT WEBINAR Understanding the CGU SME approach on Business Interruption Date: 27 th April 2016 (Tentative)

21 21 MARKETING MATERIAL

22 KEY THINGS TO CONSIDER How strong is your clients understanding of Business Interruption? Have a think about it and have the conversation Speak to your CGU Business Relationship Manager to find out more! 22

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