Reinsurance is the business of insuring the insurance companies.These companies generally are in the forefront of understanding the global economic changes and have a great understanding of the risks. The leaders in the industry are the likes of Munich Re, Swiss Re and Zurich.
Reinsurance companies for years have focused on traditional ways to cover risks and maintain healthy profits with conventional products.However, these companies are changing with disruptive times.
One such product which caught my attention was ‘Non -Damage Business Interruption’.
What is NDBI ?Insurance kicks in typically when there is a damage to property to life.However, in business there are several scenarios where the business are made to manage risks without damage. Reinsurance companies like Munich Re identified this need and were able to design products to cover non-damage business interruption.
Few examples of business interruption without damage are: airline companies facing huge loss due to climate issues & security issues, pharma companies who have to stop production due to regulatory controls etc.
Conventional wisdom said you insure for damage but there were folks who challenged conventions and was able to design product which was the need for the hour and was win-win for the insurer and the insured.