1. Delivering the promises

2. Title: Punishment for good behavior ? For:28 th Annual Caribbean Insurance Conference By:Jan Willemse Date:2 juni 2008

3. The chain of business continuity Production capacity: Assets - Buildings - Machinery Staff Utilities Supplies: Raw materials Goods Revenue Expenses Profit Markets: Client needs Accessibility

4. Impact of catastrophic events Direct damages  Private property  Public facilities Indirect damages  Loss of potential production/services  Loss of income  Additional costs

5. Effect of CAT events on economic performance Business sectors:  Agriculture: fall in production output  Manufacturing: decrease in production activities  Service sector:decline in activities

6. Effect on chain of business continuity Production capacity: Assets - Buildings - Machinery Staff Utilities Supplies: Raw materials Goods Revenue Expenses Profit Markets: Client needs Accessibility χ χ

7. The Business Interruption Insurance Gross Profit related to the amount by which the turnover during the indemnity period will, in consequence of the damage, fall short of the standard turnover.

8. Definitions  consequence of the damage: interruption only on account of damage at the insured property by an insured peril  indemnity period: the period beginning with the occurrence of the damage and ending not later than the maximum indemnity period thereafter, during which the results of the business are affected in consequence of the damage  Standard turnover: the turnover during the period corresponding with the indemnity period in the twelve months immediately before the date of the damage

9. 0 20 40 60 80 100 120 24681012141618202224262830 Time $ Standard Turnover Act. Turnover major material damage Act.Turnover minor material damage repair event Sample scenario I

10. 0 20 40 60 80 100 120 24681012141618202224262830 Time $ Standard Turnover Act. Turnover major material damage Act.Turnover minor material damage repair event Sample scenario I

11. 0 20 40 60 80 100 120 24681012141618202224262830 Time $ Standard Turnover Act. Turnover major material damage Act.Turnover minor material damage repair event Sample scenario I

12. 0 20 40 60 80 100 120 24681012141618202224262830 Time $ Standard Turnover Act. Turnover major material damage Act.Turnover minor material damage repair event Sample scenario I

13. 0 20 40 60 80 100 120 24681012141618202224262830 Time $ Standard Turnover Act. Turnover major material damage Act.Turnover minor material damage repair event Sample scenario I

14. Adjustments  Trends and variations  Special circumstances  Predictability?  Extent of uncertainties?

15. repair event Sample scenario II

16. repair event Sample scenario II

17. repair event Sample scenario II

18. Summary  BI cover considered as an insurance to safeguard the continuity of the business involved  External factors (outside insured object) are causing extra loss of income and therefore a greater risk to business continuity  BI policies require material damage to insured objects

19. Conclusions  Excellent risk management and prevention measures can adversely affect the continuity of the insured business (punishment for good behavior?)  Policies do not cover Business Interruption losses as a result of external factors (e.g. "loss of market”)  BI insurance not a full (asset protection) solution to protect and safeguard continuity of the business

20. Thank you for your attention!