Coverage For The Thailand Floods: Learning Lessons From Earlier Catastrophes

As the flooding news from Thailand drags on, businesses must look to the lessons that past disasters can teach us - the Sendai earthquake and tsunami last March (the "Sendai Event"), Hurricanes Katrina and Rita, and even 9/11. Thailand is a critical link in international supply chains, notably automotive and computer components. Thus, the current flooding will again focus policyholders' attention on the important role played by Contingent Business Interruption (or Contingent Business Income) ("CBI") insurance, as the Sendai Event did.

CBI insurance is designed to cover losses caused by damage to or destruction of the property of suppliers and customers of the policyholder, which the policies call "Dependent Properties." Of course, the insurance companies that sell this coverage try very hard to avoid paying CBI claims, particularly when they are faced with a large catastrophic event, like a natural disaster, which leads to a large number of similar kinds