Alarm Over “Wafer-Thin” Supply Chain Insurance Coverage
March 22, 2023
Based on the results of a survey of risk managers, logistics managers, and CEOs worldwide, the Global Head of Broking at Willis Towers Watson (WTW), in a post in StrategicRisk, says that for many large companies “insurance to cover purely financial supply-chain losses provides only a wafer-thin patchwork of protection.” The situation is said to have created a demand bulge for relevant business interruption coverage.
The survey tapped 800 risk managers and other senior decision makers across Europe, North America, Asia-Pacific, and Latin America in companies with annual revenues of more than $250 million, in sectors ranging from food and agriculture to semiconductors and complex manufacturing. Part of the issue is the difficulty that companies have understanding all the links in their own complex supply chains. For years, says a WTW post about its survey, ever-expanding and more efficient supply chains were “like magic oil lubricating the global economy.” But that model has been battered, first by fallout from the pandemic and more recently by tensions related to the war in Ukraine and the potential conflict with China.
Among the survey findings: Sixty-five percent of respondents said supply-chain-related losses were higher or much higher than expected over the past two years (although a majority of those said the sales impact was short term). Eighty-three percent said they had made changes in their supply chain, including 18 percent who said their supply chains had been “completely transformed.” -Today’s General Counsel/DR
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