The survey asks risk managers to evaluate their supply-chain exposure-insurance solutions in the wake of flooding inThailandand the earthquake and tsunami inJapan.

More than half, 52 percent, of the respondents that experienced a loss in the past five years say they have never recovered a supply chain or related loss claim. Sixty-one percent of those surveyed say they experienced a supply-chain disruption within the past five years.

When it comes to insurance policies and triggers for coverage after a loss, 54 percent of the respondents say their property insurer clearly articulated and explained the business interruption value reporting requirement, while 42 percent say their insurer was not clear about it. The balance declined to answer.

Regarding the type of information that the insurers need to underwrite supply-chain risks, 43 percent of risk managers say their insurer explained it to them, while 46 percent feel their insurer failed to explain what was needed.

As far as confidence that insurers' models provide accurate business-interruption data, only 26 percent say they were confident the data was sufficient, while 51 percent say they lacked confidence. Eleven percent say they did not know, while the remainder says it was not applicable.

The survey received 67 responses from risk managers or other financial executives with the responsibility for the risk-management function. Of the 67 responses, 54 were from those with the specific title of risk manager, primarily with large corporations.

Explaining the results, John Dempsey, managing partner of Dempsey Partners, tells NU Online News Service that a major part of the problem for underwriters explaining the underwriting criterion is that the tools they are using are antiquated while the risks have become increasingly complex.

“The standard business-interruption worksheet was developed over 100 years ago when businesses were much simpler than they are today,” says Dempsey.

He notes that a multi-national corporation with a diverse portfolio of businesses can no longer be adequately underwritten with tools that were designed to write a single-risk exposure.

Underwriters today need tools that can aggregate more information and take into consideration the loss-mitigation techniques a company is incorporating into its structure, such as double sourcing to avoid a shutdown of operations, says Dempsey.

He says risk managers have begun to “take matters into their own hands” and perform their own risk surveys of their operations to present to underwriters in order to explain their business and “differentiate themselves from their peers,” a practice that helps both the buyer and seller of insurance.

As far as what insurers are offering in terms of coverage, Dempsey says when the insured suffers a business-interruption event, but fails to obtain insurance recovery, it is often because the trigger event was not covered, such as when flights to and from Europe were cancelled due to volcanic ash spewing over Iceland in early 2011.

He says such coverage-gap events “are an opportunity for insurers to expand their business offerings and collect more premiums along the way.”