Contact: Patrick Mead; Carter Newell (Queensland, Australia)
Carter Newell has recently been involved with issues relating to the treatment of the emerging risk to revenue of projects under construction, by way of the risk transference mechanism of DSU insurance cover.
DSU stands for Delay In Start Up. It is also sometimes known as Advance Loss of Profits [ALOP] and is a specie of business interruption insurance. It follows the same principles as an annual business interruption policy but applies to anticipated future earnings of a future business or venture.
A Global Risk Management Survey in 2013 identified business interruption as one of the top 10 risks faced by corporate insureds.(1)
That same survey ranked business interruption by industry in comparison to other top risks and found, not surprisingly, that it was most highly ranked by industries where any loss of production has an almost immediate impact on their bottom line, with very little scope to claw back the loss (e.g. manufacturing, utilities etc.).
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