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Captive Insurers with Property Exposures Should Explore Infrastructure Risk Topic

Bridge Infrastructure
March 22, 2016

A colleague of ours recently asked us about speakers on the topic of infrastructure. He works for an association of government entity risk pools, and they are exploring this topic for their fall conference. The thesis being explored for the conference is the growing role of infrastructure risk within government risk pools. As we thought about it, this risk is also one of those emerging areas that captive insurance companies should at least consider, as well.

Two recent articles about aging bridge infrastructure seem to support the idea that infrastructure deserves additional consideration as an emerging risk to captives, especially those with property programs. 

The first article, titled "Deficient Bridges Could Mean Supply Chain Woes," by Jonathan McGoran, appeared March 9, 2016, on the Risk & Insurance website.

"In its 2015 report on the nation's bridges, the American Road & Transportation Builders Association (ARTBA) labeled 58,500 U.S. bridges—roughly 10 percent—as structurally deficient," the Risk & Insurance article begins.

"Nearly half of those—27,486—have some sort of load restriction," Mr. McGoran's article continues. "While a slight improvement over 2014, the issue still represents potentially serious supply chain risks for many businesses, and the problem will not be going away any time soon."

For captives writing property insurance, which includes business interruption expense, the damage resulting from a bridge failure and the disruption to "just-in-time" logistics could be significant.

The second article, published December 7, 2015, on the Gizmodo website and titled "The Project To Monitor Bridges and Infrastructure From Space Is Growing," by Kelsey Campbell-Dollaghan, lends credence to the potential issues addressed in the first article.

The Gizmodo article discusses a new project of the European Space Agency and the University of Nottingham that would use satellites to monitor the aging and risk factor of infrastructure "at a given moment, right down to the centimeter.

"Now, more countries want in," the article states.

Captives with property exposures looking to embrace generative thinking would do well to add infrastructure risk to the list of topics for exploration.

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