A Non-Physical Damage Business Interruption (NDBI) cover which Swiss Re Corporate Solutions developed for the Swiss Federal Railways (SBB) has won Insurer Innovation of the Year at the inaugural European Risk Management Awards 2016.
The solution provides multi-year cover for non-physical damage business interruption due to natural catastrophes, information system faults (ie cyber risk) or regulatory abandonment of rolling stock.
Ferma and Commercial Risk Europe launched the awards this year to raise the profile of the profession within the wider business community and show the value that risk and insurance management can bring. The judging panel comprised leading risk managers within Ferma and winners were announced at a gala dinner ceremony in December in Brussels on 6 December.
"We are very proud to receive this award for innovation," said Domenic Seifert, Swiss Re Corporate Solutions' Country Manager Switzerland. "We work hard to deliver added-value to our clients. In this case, our collaboration with SBB resulted, not only in a first-of-a-kind solution, but more importantly in cover that really protects SBB's business against a number of unique risks."
Christian Fankhauser, SBB Head of Insurance Management, commented: "We can 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."
Protect earnings even if no physical damage occurs
Development of the cover started when SBB approached Swiss Re Corporate Solutions in order to better understand – and quantify – the risks that could affect their earnings or cause additional expenses, such as black swan events. A key consideration was that the risks may not imply physical damage to SBB's assets.
This NDBI cover reduces income volatility as a result of 'black swan' events. It extends the boundaries of insurability and complements the traditional property cover. Such catastrophic scenarios were identified on the basis of past incident and varied exposure data. The analysis showed that the SBB had a substantial exposure to risks that could interrupt its operations for several days or even weeks.
The cover called for a thorough assessment of SBB's needs, as well as extensive scenario modelling and insights from various expert areas including underwriting, structuring, actuarial services, contracts and claims. The deal was previously awarded the top prize by the Swiss Insurance Innovation Awards in 2015.
'Black swan' events can negatively impact earnings and weaken balance sheets. These risks are rare and unpredictable, but they can potentially be insured. We have designed similar insurance solutions for clients in other sectors including airlines and hotels chains.
Shortlisted in emerging risks category - cyber solutions
As part of the awards Swiss Re Corporate Solutions were shortlisted in the Emerging Risks category for a comprehensive cyber protection with risk mitigation and remediation services. The insurance cover encompasses pre- and post-event services, which helps clients prepare for – and recover from – a cyber-attack. The product's preventative services are provided by IBM and include cyber security training and annual IT security testing. The cover provides clients with access to a dedicated data-breach response network available 24 hours a day, 7 days a week.