This is the second article in a four-part series from Lynch Insurance Brokers taking you through the reasons you should protect the long-term viability of your business with a Business Interruption insurance policy, along with what you need to know about it and how it works.
BRIDGETOWN, Barbados, Thursday November 9, 2017 – Caribbean territories are greatly exposed and highly vulnerable to natural disasters, which means that our homes, businesses and lives are always at risk.
However, despite 89% of businesses in Barbados being exposed to loss of income from catastrophes, only 11% of these have put protection in place with the adoption of a business interruption insurance policy.
When one takes into consideration the fact that if a business suffers a slowing or halting of operations, thereby inhibiting its ability to earn revenue, financial obligations such as rent and other physical overheads, wages, payment for stock and supplies, among other costs become problematic.
According to the 2017 Allianz Risk Barometer Report, the average cost of the loss of income is 36% greater than the actual damage to the property of a business itself.
It is for this very reason that 40% of businesses impacted by catastrophes do not survive. This number would be greatly reduced if these businesses had a policy in place that provided them with the financial wherewithal to continue operating following a disruptive incident, or at the very least, allow them to cover financial obligations until operations resume.
To understand the severity of its potential impact on a business, one simply has to look at the 2017 Allianz Risk Barometer Report’s list of top risks. Market developments, cyber incidents, natural catastrophes, changes in legislation and regulation, macroeconomic developments, fire or explosion, political risks and violence, loss of reputation or brand value, as well as new technologies, all ranked below Business Interruption.
To reiterate, risks two through ten can hurt a business, however, business interruption can destroy it. It therefore goes without saying that all businesses need to take it seriously.