Claims management: Adapting to new long-term risks trends

Commercial Risk recently put together an impressive line up of speakers to discuss new long term risks in light of recent happenings in the supply chain industry.

Kingsly Kwalar, CEO of OPTIMIZ together with Otto Kocsis, Principal Business Interruption & Resilience, Risk Engineering, Zurich Resilience Solutions and Martin Schachtschneider, Head of Business Development, Belfor Germany  had a round table discussion on supply chain challenges where the recent maritime events were discussed.

At the start of the pandemic, supply chains quickly became the center of attention for many businesses. According to Otto, the massive upheaval / lockdowns resulted in some claims but not unusually many as most would have expected. He opined that there was certainly lower business activity, therefore, not more claims. He said Covid 19 caused a supply & demand shock, so the impact on Supply Chain was much bigger than the claims impact – the Supply Chain impact also caused an important change in Supply Chain Risk Management: the share of companies using tools (not spreadsheets) to manage Supply Chain has increased by more than 50%.

Kingsly echoed this view and pointed out the increased use of digital solutions by players in the market to overcome some limitations brought about the pandemic. He indicated that the delay in ship sailings were a natural consequence of limited travel and of companies working on skeleton staff. As far perishables are concerned, their quality at outturn is a direct function of time and temperature. As such, extended transit times would result in diminished shelf life.

In explaining how claims are managed in a pandemic, Otto said there continues to be impacts in sourcing of some materials, including but not limited to the following:

Plaster, roof tiles, timber, specialist paint & wallpaper, screed, UPVC products and glazing. Delays continue to be evident particularly in respect of Timber, Paint and UPVC products and glazing. With the ongoing Lockdowns, insurance works are considered essential by the very definition of the loss/insured event then this type of repair is never planned, and the majority of insurance claims do have H&S concerns (services being affected, dampness on Escape of Water EOW losses which will cause further damage and possible mould growth if not resolved, welfare issues, unsafe ceilings/floors… etc.) Police are conducting road checks and where they deem travel to be ‘too far’ to achieve the above and this travel may be refused. Crawford are working with customers and the network to achieve fulfilment where at all possible

Concluding the round table discussions, all participants were in unison about the need for new digital products to be adapted by the industry but sent words of caution on innovation for the sake of it rather than to solve a clearly defined problem.

Covid-19 has radically altered long-term risk trends, with new exposures emerging from the pandemic. It has once again clearly shown the limitations of existing business interruption (BI) coverage for such intangible and systemic risks. Claims and class actions brought against insurers to try and trigger BI policies has led to high profile legal cases in the UK, US, Australia and South Africa that will have far-reaching implications for the demand and supply of BI cover. More broadly, new ways of working, changes in travel habits, altered supply chain networks and increased reputational risks have impacted established risk trends, with new exposures and increases in claims patterns.

Liz Booth

We help international traders and their insurers to remotely inspect cargo and automate damage claims.


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