How the underwriter assesses your risk
The insurer sells you cover for losses from downtime, and the price depends directly on two of its expectations: how often you may have a stoppage and how long it will last. The first factor is about protection and prevention, the second about the speed of recovery. For an insurer, a company that recovers in two days is many times cheaper to cover than a company that will be down for three weeks, even with the same likelihood of an incident.
The problem is that without your documents the underwriter assesses the risk “by industry”, that is, by the worst case plus a margin. Anything you have not shown is interpreted against you.
What to show: 5 documents
- Business impact analysis (BIA): proof that you know your critical processes and the cost of their downtime. How to carry one out: see the article on BIA.
- Continuity and recovery plan, with recovery time objectives (RTO) for key systems and production areas.
- Test records: recent, from the last year. For an underwriter, a tested plan is worth an order of magnitude more than a plan that only exists on paper.
- Backup arrangements: data copies, backup capacity, alternative suppliers, workaround processes.
- Incident history and lessons learned: a mature response to failures counts for more than having no failures. Show what happened, how you recovered and what you changed.
Figures that lower the premium
Three indicators work best. The first is the actual time to recover critical operations, measured in exercises and not just declared. The second is the share of revenue the business keeps in emergency mode thanks to workaround processes. The third is the cost of one day of downtime, calculated by a method and not estimated by eye (how to calculate it). The same figures determine the right amount of cover and the right indemnity period. Without them, companies regularly insure for the wrong amount and the wrong period.
What raises the premium
- A single site or production line with no backup, and sole suppliers with no alternative. These are single points of failure (how to find them).
- Backups on the same network as the production systems.
- A plan on paper with no tests. Underwriters have learned to tell living documents from ones written to tick a box.
- Omissions in the questionnaire: a discrepancy found during claim settlement may cost you the payout.
Linking BCM and insurance
Insurance and continuity work together as two parts of one protection for cash flow. BCM reduces how long downtime lasts and how likely it is; insurance covers what cannot be reduced. The best result comes from using both: mature BCM lowers the premium and improves the chances of a smooth payout, and insurance analysis shows where it pays more to invest in resilience than to pay for the risk. Our continuity dashboard puts the figures an underwriter needs on one screen, so you can talk to the insurer as an equal.
Frequently asked questions
How much can the premium realistically be reduced? It depends on the industry and the current risk assessment. In practice, mature BCM can cut the premium by anything from a noticeable few per cent to tens of per cent. It also improves the terms: deductibles, the indemnity period, exclusions.
We already have a policy. Is it too late? No. You present the documents at renewal, and major improvements in protection are a reason to review the terms during the policy period.
What matters more: a cheaper policy or the right cover? The right cover. The main losses from interruptions come from underinsurance and the wrong indemnity period, not from the size of the premium.
From the risk register to management decisions
Check whether your risks reach the people who make decisions. The dashboard shows the status on one screen; the turnkey system makes it work in practice.