Geopolitical and catastrophic weather events are the two most impactful forms of supply chain disruptions. For the former, such risks have intensified with a change in the new world order as market instability becomes the norm, and it will likely stay that way for at least a while longer. For the latter, the data has established that climate change continues to exacerbate the destructive nature of major weather events, and insurers and reinsurers use that data to draft coverages, carve out exclusions, and set premiums. Regardless of one’s politics, the insurance industry relies upon data that show weather patterns are worsening. As a result, the commercial insurance market leaves most businesses with blind spots and exposed risks.
Supply chain disruptions can shut down a business. Irrespective of the cause of the disruption, captives are used to backstop the losses or higher costs typically associated with having to change suppliers mid-cycle and delays associated therefrom. For those feeling the need to finance such risks, business owners may prefer to pay premiums to an insurance company that they own rather than have those premiums leave the corporate umbrella for good. If you would like to explore the idea of having your company establish its own captive insurer to protect its bottom line, please feel free to contact me to learn more.
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