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Skittish Insurers Scrutinize CBI Coverage Requests, But Market Still Open

Battered by natural catastrophes, Property underwriters have grown cautious of offering Contingent Business Interruption coverage to companies with significant risk. Nevertheless, insurers are still open for business to companies that can answer detailed questions about their supply chains.

By Michael Voelker | Updated on March 08, 2013
Contingent Business Interruption (CBI) coverage really took center stage for the first time two years ago after the one-two punch of the earthquake in Japan and flooding in Thailand—back-to-back disasters that crippled the supply chains of auto manufacturers, tech companies and other businesses around the globe. 

“Companies were caught off guard [by the catastrophes] in 2011,” says Robert Hartwig, president of the Insurance Information Institute. “Management trends in recent years had rewarded running thin inventories and just-in-time production, and 2011 exposed the weakness of that. Auto manufacturers lost billions.” 

Insurers were likewise waylaid by the magnitude of the CBI losses they incurred, having essentially thrown in the coverage on Property policies over the course of time.

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