W W W . C H I C A G O L A N D R I S K F O R U M . O R G

A Panel of Experts

Clearing the Confusion – The Importance of BI Value Reporting

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The Business Interruption Wording Review Report by the Chartered Institute of Loss Adjusters – Key Issue – Getting the Values Right

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The Panel

•  Bob Brix - Chubb –  PMM Practice Leader – Property & Machinery Breakdown – rbrix@chubb.com –

312-529-6897 •  Jennifer Gavelek – Mesirow Financial

–  Senior Vice President, Producer – jgavelek@mesirowfinancial.com – 312-595-7252

•  Amy Scheiden – Inland Risk & Insurance Management –  Assistant Vice President Claims and Loss Control –

amy.scheiden@inlandgroup.com – 630-218-8000 •  Drew Olson – BDO Forensic Insurance & Recovery

–  Director – dolson@bdo.com – 312-233-1826

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Guidance on Standard Businesses

•  Reporting forward-looking 12 months of business interruption value –  Take into consideration any expected sales growth (decline) in the

business.

•  Report profit plus continuing expenses (most insureds start with revenue and deduct variable expenses)

•  All semi-variable expenses (utilites, repairs, etc.) should be considered as 100% insured in the declarations.

•  Essential/non-essential employees identified and reported in accordance with any ordinary payroll limitations (i.e. 90 days)

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Token Worksheet Example

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Non-Standard Businesses

•  Financial Institutions •  Technology Companies (data

center driven businesses – we are in the cloud)

•  Businesses with products with longer revenue streams (e.g. printers, jet engines, cell phones)

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Coinsurance

•  What’s the point? –  Helps to guard against the moral hazard that the policyholder will not

purchase sufficient insurance to cover a total loss in order to save money on insurance premiums.

•  How common is it? –  For US policyholders we see the coinsurance clause being waived but the

waiver has to be requested.

•  Why do I need to worry about it? –  While not as common in the US, many local foreign policies still have the

provision and can limit coverage if not reported appropriately.

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Extra Expenses

•  Pure extra expense versus mitigating extra expense (expense to reduce the loss)

•  Sublimit versus a part of the time element coverage

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Contingent Time Element

•  What about my suppliers and customers exposure to my business?

•  What is my responsibility to my insurers?

•  What do I need to report?

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Clear the Confusion

•  “It's funny. All you have to do is say something nobody understands and they'll do practically anything you want them to.”  ― J.D. Salinger, The Catcher in the Rye

Questions???