Climate Change and Supply Chain Disruptions Are Reshaping Business Interruption Insurance

The landscape of business interruption (BI) insurance continues to evolve as climate change and global supply chain disruptions reshape risk profiles for businesses of all sizes. Following years of a hardening market, rates are beginning to stabilize, yet underwriters caution that accurate reporting of BI exposures remains critical — especially as inflation and supply chain challenges persist.

Contingent business interruption (CBI) coverage, which addresses supply chain-related losses, adds another layer of complexity. Larger corporations often bolster their resilience through in-depth risk mitigation strategies, while small businesses — those arguably most vulnerable — may lack the resources or understanding to fully leverage available coverage options.

Carriers emphasize the growing importance of accurate data collection, including detailed supplier information and geolocation data, to prevent exposure stacking and manage aggregate risk. Alternative risk transfer solutions, such as parametric insurance, have seen rapid growth, offering innovative ways to address business interruption challenges.

Ultimately, while insurers continue to expand BI offerings, they stress that risk management and contingency planning must come first. Insurance is positioned as a secondary safeguard — essential, but most effective when paired with proactive operational resilience strategies.