Insuring Continuity

1. Insuring Continuity Integrating the BC Program with Traditional Insurance

2. Session Objectives • Discuss types of insurance relevant to BCM programs • Demonstrate how BCM can benefit from insurance programs • Demonstrate how insurance programs can benefit from the BCM program

3. Insurance Overlap with BCM • Business Interruption • Property • Directors’ and Officers’ • Workers’ Compensation/General Liability • Professional Liability

4. Business Interruption Insurance • Business Interruption Defined: • Thesaurus Legend: Noun 1. business interruption insurance - insurance that provides protection for the loss of profits and continuing fixed expenses resulting from a break in commercial activities due to the occurrence of a peril • Business Interruption Purpose:To protect the earnings of the insured and do what the insured would do for itself had no loss occurred. • Business Interruption:“Net Profits Plus Continuing Expenses” or “Gross Earnings less non-continuing expenses”

5. Section 1: BI Program Design Business Interruption Coverages Services Overview

6. Section 1: BI Program Design Business Interruption Basics Services Overview • Types of policy forms • ISO Filed Forms • Manuscript/Broker Tailored Form • Propriety/Insurance Company form • Basis of coverage: • Gross Earnings: “Gross Earnings less non-continuing expenses” or • Net Profits: “Net Profit plus continuing expenses” or • “Reduction in Turnover less change in standing charges.” • Conditions: • Covered cause of loss • Covered location • During period of indemnity • Mitigation • Actual loss sustained

7. Section 1: BI Program Design Services Overview

8. Insurance can help BCM • Cash to implement strategies • At time of disaster or execution portions of staged strategies • Contingent coverage • Current risk information • Basis for MFL/PML • Exposures revealed in BIV analysis

9. Insurance can help BCM • Backstop for losses/failed responses Deductible Strategy Funding Self Insurance Excess/Reinsurance

10. BCM can help insurance • What doesn’t work: • Putting insurance salesmen in your mass notification system

11. BCM can cover BI “Gotchas” Services Overview Section 1: BI Program Design • Earnings loss scenarios which may not be covered by business interruption insurance (sample): • Obvious exclusions (strikes, war, flood, etc.) • Obscure exclusions (loss of market, no physical damage, consequential losses, etc.) • Examples: • 9/11 losses with no physical damage • Katrina losses – effects on population vs. damage (market) • Northeast power blackout of 2003 • Offshore property exclusion • Pandemic • Human impact, Loss of Life

12. BCM can cover BI “Gotchas” Services Overview Section 1: BI Program Design • Earnings loss components which may not be covered by business interruption insurance (sample): • Obvious exclusions (BI loss stemming from - mold, flood) • Obscure exclusions (loss of market, retraining employees, consequential loss, etc.) Examples: • Pre-loss excess labor to expedite goods production in advance of loss • Mitigation expenses incurred but not utilized • Excess fuel costs stemming from Katrina • Disaster bonuses, employee tips • Broader market impact • Excess bad debts stemming from Katrina

13. Actual Example of BCM helping Insurance

14. You know you might need a professional BIV if… • What to include as a deduction for purpose of getting to gross earnings • (avg. daily value deductible or co-insurance reporting) • The policy has location based limits based on the BIV worksheet • Extended interruption is a possibility for some locations

15. Contact me at: Michael Keating, CBCP Michael.Keating@NavigantConsutling.com 404-575-3843 LinkedIn: http://www.linkedin.com/in/michaelkeating Questions?