Zurich has announced an additional product to its Supply Chain Risk proposition. Essential Supply Chain Insurance builds on the global insurer’s award winning supply chain offering by launching an extra simplified product. This will help many customers better understand and mitigate their supply chain risk though a thorough evaluation of their outsourced key suppliers. New product details are below.
Increasingly, many companies have turned to outsourcing as a means to reduce costs, get access to specialised knowledge and specialist skills. This increased reliance on outsourcing inevitably leads to an environment where supply chain disruptions are one of the most important and complex risks they face. As this outsourcing dependence increases so does the risk around revenue shortfall when the supply chain breakdown from a physical or non-physical event takes place (e.g. strikes, political events, IT failure, border issues or fire).
Essential Supply Chain Insurance has capacity up to US$100M (£60M) and is aimed at middle market companies across a number of sectors including manufacturing and energy. The offering is also designed to cover risks arising from direct named suppliers and supplies with the option to buy broader supply chain insurance coverage. It offers an attractive option for the middle market companies as they may have limited funds to protect themselves when they suffer a supply chain disruption.
Nick Wildgoose, Global Supply Chain Product Leader at Zurich comments:
“Non-damage supply chain interruption events have a major impact on companies, especially as these aren’t covered under standard insurance policies.
“On-going threats such as risk from cyber-attack, extreme weather caused by climate change and political risk are examples which have a knock on effect on companies, no matter where you are located in the world and irrespective their size. The loss of even a single key supply can precipitate a sales short fall having a dramatic impact on cash flow.”
Top tips to limit supply chain issues:
To help customers small and large reduce the severity of disruptions – and ultimately the impact on their bottom line, Zurich suggests companies take these simple but fundamental steps:
1) Identify all critical suppliers – not just direct suppliers
2) Focus on the relationship and management of critical suppliers, ensuring they have their own business continuity plans in place
3) Ensure that availability of key products for the entire supply chain, from raw materials to end-users, can be tracked effectively
4) Analyse the impact of failure on profits and output
5) Ensure that the Board takes responsibility for supply chain risk management
6) Take a holistic approach to supply chain risk management; threats to supplies of key raw materials and components can come from both physical and non-physical causes
Zurich Essential Supply Chain Insurance key features:
· Two specified suppliers/supplies per customer (option to increase number of suppliers/supplies)
· Risk arising at direct named suppliers only (option to go through the whole supply chain
· An "all risks" approach which covers non-physical damage as well physical damage scenarios (option to add insolvency cover)
· Capacity: Up to USD 100m(£60m)
· Policy period: 12 months with a 12 month indemnity period
· Premium calculated according to chosen covers and suppliers
· Fees for risk assessment typically based on 1-2 man days and costs can be deferred and included in the insurance premium