As companies stretch their supply chains around the world, accumulating risks along the way, insurance products are evolving to better protect against those risks.
Traditional insurance for supply chain risks involves contingent business interruption, which is an extension of a company’s property policy. Contingent business interruption comes into play if a company’s suppliers suffer property damage from insured perils and the property damage causes the insured company to suffer a business interruption loss, explained Scott Patterson, U.S. leader for property specialized risk at insurance company Marsh.
Mark Robinson, vice president at UPS Capital North America, pointed to improvements in insurance to cover shipments. Some involve the use of new technologies, like inexpensive RFID chips that can be put inside packages to monitor the temperature during transit or detect whether a package is opened.
UPS Capital has a product, Proactive Response Secure, that covers pharmaceutical companies’ shipments of products that need to remain at a certain temperature. UPS monitors the product as it’s being shipped, and if delays occur its team will intervene to get the product to its destination, Robinson said. It has a similar product for wine companies, which also have concerns about the temperature of products being shipped.