Supply chain disruption impacts still an issue: WTW
Businesses globally are still adjusting to the impact of supply change disruptions over the past couple of years as ramifications including underinsurance persist, a WTW report finds.
A global survey of large companies has found supply chain-related losses in the past two years were higher or much-higher than expected for 65% of respondents,
Some 83% have made supply-chain changes, including 18% that completely transformed their approach, while 58% plan to make significant changes over the next two years.
“Businesses have learned from the supply-chain crisis and are actively working to increase their resilience to future shocks, but much more remains to be done,” WTW Global Head of Broking Hugo Wegbrans said.
The survey involved 800 decision makers including risk managers, supply chain and logistics managers and CEOs in countries across Europe, North America, Asia-Pacific and Latin America.
WTW Head of Broking Australasia Trent Williams says the impact of increased supply-chain risks remains a challenge in a number of areas in the region.
Mr Williams says in the property, for example, insurers are focussed on resilience throughout the supply chain with insureds needing to pay attention to indemnity limits, ensuring all suppliers and customers are identified and that risks rare quantified to ensure adequate limits.
Supply chain impacts are also still being felt locally in construction.
“Many projects that have been delayed are now coming to the end of their original construction period and are requiring policy extensions,” Mr Williams says. “However, such extensions can be problematic, with insurers looking to change their rating and imposing more restrictive terms and conditions, particularly where there has been claims activity.”
Mr Wegbrans says the large majority of businesses recognize that insurance has a role to play, which represents an opportunity.
“At the moment, insurance to cover purely financial supply-chain losses provides only a wafer-thin patchwork of protection,” he said. “Major coverage gaps were exposed by the pandemic, and companies remain un- or under-insured.”
Only a quarter of those surveyed feel confident they have sufficient coverage for the impact of extreme weather on their supply chain, and fewer than one in five has specific policies to cover supply-chain business interruption.
“Businesses in all sectors need to transfer their significant exposures to achieve true resilience,” Mr Wegbrans said.
Sectors involved in the survey were life science, semiconductors, food, beverage and agriculture, logistics, complex manufacturing, construction, energy and renewables.
