A Multiperil Non-Physical Damage Business Interruption (NDBI) cover developed for the Swiss Federal Railways (SBB) has won the top prize at the Swiss Insurance Innovation Awards 2015. The coverage scope is for business interruption due to i) imminent natural catastrophes; ii) non-performance of information systems (cyber risk); or iii) regulatory abandonment of rolling stock.
The Insurance Innovation Award was established in 1999 by the Swiss insurance journal 'Schweizer Versicherung', the Swiss Insurance Broker Association (SIBA), the Swiss Risk Manager Association (SIRM) and Accenture. Since its inception the Reinsurance business unit of Swiss Re has been a runner-up twice, and 2015 marks the first time that Swiss Re Corporate Solutions takes the top prize home.
"We are very proud to win this award," said Domenic Seifert, Swiss Re Corporate Solutions' Country Manager Switzerland. "It's worth noting that we've won jointly with SBB – which highlights our client centric approach and our 'we're smarter together' brand promise."
Christian Fankhauser, SBB Head of Insurance Management, commented: "We dare say that jointly we have broken new ground in the corporate insurance space. We started with a vision and an idea. With Swiss Re Corporate Solutions, we could actually bring this to fruition. The forward thinking and open-minded collaboration in that process has been enriching and inspiring for all involved."
"SBB have recognized for some time that the classic business interruption no longer fulfills today's needs in terms of coverage," said Dietrich Och, Accenture's Managing Director Financial Services, during his remarks when presenting the award. "SBB decided to tackle the issue and found in Swiss Re Corporate Solutions an innovative partner who prepared the cover with risk modeling and contract formulation."
Protecting earnings also when there's no physical damage
The development of the cover started when SBB approached Swiss Re Corporate Solutions in an effort to better understand –and quantify– the risks that might either affect their earnings or cause significant additional expenses. A key consideration was that the risks may not imply physical damage to SBB's assets.
This first-of-a-kind NDBI cover effectively reduces income statement volatility from 'black swan' events. It extends the boundaries of insurability and complements naturally the traditional Property cover. The 'black swan' type scenarios were identified on the basis of life past incidents, or as potential risks that could materialize. The analysis suggested that SBB's core business had a substantial exposure to risks that could interrupt operations for several days and even weeks.
The cover called for a thorough assessment of SBB's needs, as well as extensive scenario modelling. It also drew insights from various expert areas, in particular underwriting, structuring, actuarial services, contracts and claims.