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Mitigating the impact of business interruption

A severe storm in 2014 left a Korean tile manufacturer's production plant badly damaged. It faced an insured loss that could potentially have run into tens of millions of dollars.

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Mitigating the business interruption loss involved modifying the production layouts at the policyholder’s other facilities.

Once the production line was ready to resume operation Forensic Advisory Services deemed the most effective mitigation measure was to continue manufacturing the non-exclusive tiles at the other facilities for a few weeks, while solely dedicating the damaged facility to producing the exclusive product.

  • The Challenge:

    The insured manufactured four different types of ceiling tiles at the affected production plant. Although three of these could be produced in its other premises, a fourth was exclusive to the manufacturer and could only be produced at the damaged facility. As some of the plant’s tiles could only be produced at that site, early estimates for the business interruption loss ranged from $8m to $12m.

  • The Solution:

    To mitigate the business interruption loss to best effect so that the insured could continue to supply its non-exclusive tiles to market while also enabling it to resume production of its exclusive product as quickly as possible.

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