CILA BUSINESS INTERRUPTION

SPECIALIST INTEREST GROUPIS DEPRECIATION A SAVING?

SIG CONFERENCE 29TH OCTOBER 2007

Depreciation as a Saving

• Rental Periods• Insolvency• Bank Interest• Proximate Cause• Wide Spread Loss• Blighting• Engineering – Time Excesses• Depreciation as a Saving

The Joy of Business Interruption

Depreciation as a Saving

Q. Is Depreciation a Saving – What is CILA’s position?

R. Don’t have a single view but we could:

a) Take a vote on it.

b) Seek a legal interpretation.

c) Pass.

Depreciation as a Saving

• Professional Standards – Compare CILA

with Other Professional Bodies• Forensic Accounting Seminars

Forensic Accounting Seminars

• Carbon Credits• Make-Up at Uninsured Group Plant• PD Sub Limit and Expense to Reduce Loss• Mitigation Through Movement of Maintenance Period• Time Period to be Considered for Adequacy of Sum Insured• Inducement Payment to Customers ICW or Not Covered Economic

Measure• Depreciation• Original Loss or New Event• Contingent BI Covered, Not Covered, Excluded• Application of Deductibles Not Specifically Defined• Customers Extensions – Failure to Rebuild• Availability of Resources in Catastrophe Losses• Projection in Catastrophe Event

Depreciation as a Saving

• Professional Standards – Compare CILA

with Other Professional Bodies• Forensic Accounting Seminars• Preference for Mystery• Adjuster Roulette• Contract Certainty

Depreciation as a Saving

• Research Past Papers• Inconclusive (Definitely)• Developed Strategy to Drive Change in Policy

Wordings• Consultation

a) Within SIG Committee

b) With Cross Section of External Parties

c) With SIG Membership as a Whole

Development of the Standard

Depreciation as a Saving

• Currently Lottery Unsatisfactory

• Individual Insurers Need to Establish Their View

• UK Insurers do See Depreciation as a Saving – Waiver Could Imply Cost

• CILA Criteria May Need to be Amended to Meet Individual Insurer Preference

• Policy Wording Change

- Maybe

- But Expand to Wider Review

Insurer Reaction