Businesses seek insurance policies to help reduce disruption. Disruptions can be defined as any occurrence that may hinder normal business processes (Airmic Technical, 2012). The supply chains of businesses have changed in the recent days. The supply chain departments face different types of risks as compared to other departments. Insurance policies are bought to be able to cover conventional business interruptions that include damage-based risks that can be controlled such as fire. These types of covers are known as contingent insurance policies.
The supply chain is exposed to a number of risks that are not necessarily physical damage based. For instance, disruptions could be caused in a supply chain due to failure in IT, transport system or even large area disruptions such as earthquakes. All these would either increase cost of running business or result in substantial loses (Airmic Technical, 2012). However, it is clear that these forms of disruptions may not be contingent in nature but are considerably costly to a business. Therefore, there is need for insurance buyers to partner with insurance companies so as to develop contracts that are well outlined in a manner that they will be able to cover such risks and exposures in the supply chain.
Aim of the Study
The current study aims to evaluate the ability of the available insurance products to cover non-contingent exposures associated in the supply chain.
• How can non-contingent exposures be covered fully in the insurance policies available for the supply chain?
H0: Available insurance policies are not able to cover the needs for the supply chain sector in businesses.
H1: Supply chain insurance can be able to meet the associated risks.
The study is focused to meet the following objectives:
I. To identify the various forms of information held by supply chains and the various risks arising from holding such data;
II. To evaluate the various supply chain insurance products and how they mitigate the realized risks.
The current study seeks to use both primary data obtained from questionnaires as well as secondary data available in various libraries. The study will be making use of qualitative data from literature reviews and quantitative data from available figures in local insurance firms as well as participating firms in the research.
The study will provide both conceptual and empirical contribution. Conceptual contribution includes improved definition of the various constructs in the supply chain insurance and provision of better connection between available data and the theoretical frameworks surrounding the fields of insurance and supply chain. The empirical contribution of the study includes determination of the relationship between the available insurance products and the risks involved in the supply chain.
Airmic Technical, 2012. Airmic review of the supply chain insurance market: Review of recent developments in the supply chain insurance market. [Online] Available at: https://www.airmic.com/sites/default/files/legacy_files/Supply%20Chain%20insurance_1.pdf [Accessed 25 November 2020].