In an era defined by interdependence, digitisation and unprecedented volatility, business interruption insurance faces a critical inflection point. For insurance and risk professionals, the imperative is not merely to comprehend these evolving threats but to recalibrate how policies, capacity and exposures are structured in response.

Within the UK and globally, insurers are actively refining BI wordings to address cyber threats, supply chain disruption and climate-driven losses. Simultaneously, limits and capacity considerations are being re-evaluated, particularly for sectors reliant on technology and global supply networks.

As the scale and nature of cyber threats in particular grows, it is little wonder that such recalibration is necessary when the potential impact of interruption is considered. AIG’s 2024 Ransomware Threat Insight report found that when an organisation’s back-up data is affected during a ransomware incident, the average critical business interruption loss of hours increases by 65 per cent, and organisations are two times more likely to pay a ransom if their back-ups are affected.

The urgency of addressing systemic cyber risk is now widely recognised as a priority. Stefan Golling, board member responsible for Global Clients and North America at Munich Re, says: “In today’s technology-dependent world, organisations can only be successful if they strengthen their digital defences with robust, multi-layered risk management. Cyber insurance is an effective component in this approach.” The insurer adds that it is no longer sufficient to view business interruption purely as a consequence of physical damage; digital failure, reputational impact and operational paralysis now demand equal attention.

Within the UK market, policy evolution has seen the introduction of dependent BI extensions that cover losses arising when systems are taken offline, whether due to voluntary shutdowns or regulatory action, in response to cyber incidents.

Axa XL emphasises this shift, noting that such extensions now account for third-party and regulator-induced downtime – incidents that were previously excluded or contested.

Coverage expands

An example of the expanded coverage landscape took place late last year when Marsh and Tokio Marine Kiln launched a BI product tailored specifically for ports. The move was in response to what Ed Parker, head of special risks at Tokio Marine Kiln, calls “a clear gap in the standard cover available to ports and other cargo facilities”, which had been exposed by geopolitical turmoil.

Louise Nevill, CEO of UK marine at Marsh Specialty, adds: “Business interruption events stemming from geopolitics, trade disruption and weather-related incidents are increasing in their frequency and severity around the world, which is resulting in debilitating consequences for businesses involved in international trade. This new facility offers our port and terminal clients a rapidly available layer of cover to protect their operations and facilitate an expeditious resumption of normal operations when these events occur.”

Amid high levels of geopolitical and economic uncertainty and a shifting risk environment, the top three risks of cyber, business interruption and natural catastrophe – but also many of the other perils ranked in the top 10 of Allianz’s latest Risk Barometer – are particularly complex, unpredictable and interdependent.

“What stands out this year is the interconnectivity of the top risks,” says Michael Bruch, global head of risk advisory services at Allianz Commercial. “A change in one – or indeed a mitigating action – might have a knock-on effect on another, and another. Climate change, emerging technology, regulation and geopolitical risks are increasingly intertwined, resulting in a complex network of cause and effect.”

Bruch says cyber incidents and natural catastrophes are the two BI exposures companies fear most, followed by fire, machinery breakdown and supplier failure. The push for technological advancement and efficiency is affecting the resilience of supply chains he suggests, adding that, today, a failure or disruption in any segment of a supply chain tends to be more severe, leaving minimal time to respond.

“Automation and digitisation have significantly accelerated processes, which can sometimes overwhelm individuals due to the rapid pace and complexity of modern technology,” Bruch adds. “While many organisations strive to implement comprehensive strategies for disaster recovery and business continuity, there remains a concern that contingency plans themselves may be overly dependent on technology, highlighting the need for diverse and adaptable solutions.”

Globally, the repercussions of coups, pandemics and cyber-physical convergence increasingly compel insurers to shift from static, one-size-fits-all BI wordings toward much more tailored, agility-oriented coverage models. Risk managers are adapting accordingly, by demanding rigorous cyber and supply chain due diligence, advocating for scenario-based capacity modelling and preparing for deeper aggregation analysis. The consolidation of risks in digital platforms and supply networks means that traditional single-event thinking is no longer sufficient and that, instead, the focus should be on designing BI portfolios with holistic systems in mind.

UK businesses have increasingly leaned on broader forms of business interruption cover in recent years, particularly during major events like the Suez Canal blockage in 2021, Ukraine-related grain shortages in 2022, and Red Sea shipping disruption between 2023 and 2024. In these scenarios, the losses were not caused by direct physical damage, but by blocked access, logistical breakdowns, or sudden shifts in trade conditions. These are exactly the types of situations modern BI policies are designed to address.

There is also clear momentum behind newer BI solutions. Parametric policies (which pay out based on predefined triggers like a port closure or delay) and cyber BI cover (which responds to digital disruption across logistics platforms) are gaining traction, particularly among firms seeking faster compensation and wider supply chain protection. Insurers have responded by updating underwriting guidance, expanding BI payout triggers, and placing a greater emphasis on supporting businesses that invest in planning and resilience.

Clear Insurance Management says BI cover has evolved beyond traditional triggers linked to physical damage and the emergence of non-damage BI policies marks a shift toward a more flexible and forward-thinking approach.

It adds that, in tandem, insurers are placing greater emphasis on proactive risk management. They now request more detailed supply chain data, such as the locations of critical suppliers and the digital systems upon which businesses rely. At the same time, policies are being reshaped to incentivise resilience, offering stronger terms to companies that invest in advance planning and mitigation, rather than simply reacting after disruption occurs.

Underwriters now find themselves adjusting premium levels and capacity, particularly in sectors exhibiting high systemic aggregation exposure and unclear interdependencies. Clients demonstrating strong cyber resilience, continuity planning and supply chain visibility are better positioned to negotiate competitive BI terms. Some are bargaining for multi-year agreements to smooth volatility; others are contemplating captives or parametric solutions where traditional BI policies cannot sufficiently capture emerging risk vectors.

Other key steps include better risk forecasting with data tools, with insurers using advanced analytics to spot risks earlier. These tools can predict delays, price spikes, or supply issues caused by events such as bad weather or political unrest. UK insurers, for instance, now use scenario modelling to help businesses prepare for events like trade embargoes or transport blockages.

BI policies also increasingly cover problems at supplier sites, not just the business’s own premises. UK manufacturers, especially in electronics, are now mapping out their extended supply networks so insurers can offer cover for indirect risks, such as failure at a secondary supplier (which may supply the business’s primary supplier).

The increasingly multi-faceted risks that business now face have brought about a similarly diverse shift in approach by insurers. Where BI once rested on property damage and narrow indemnity periods, the evolving frontier now includes non-damage dependencies, cyber contagion and cascading supply disruptions. Successful BI strategy depends on aligning coverage with insights from scenario modelling and resilience testing.

As insurers and clients alike grapple with this shifting reality, the key lies in turning complexity into clarity. Future standards for BI must be dynamic, informed by aggregate stress modelling, and responsive to a world of tightly interconnected systemic risk. For risk professionals, the opportunity lies in reshaping BI not simply as a financial fallback, but as a strategic resilience tool, recognising that insurance must evolve to remain relevant and effective.

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