Organisations need to re-examine their risk management strategies and introduce new ways to strengthen their operational and financial resilience after last year’s catastrophes, says major broker Marsh.

In a paper – Lessons Learned from the Catastrophes of 2011 – the broker identifies five major risks that need re-evaluation. These include denial of access cover and contingent business interruption cover in the wake of supply chain failures following the Japanese earthquake and Thai floods.

Marsh Global Claims Practice Chairman David Pigot says the risks associated with last year’s events were largely understood, but their sheer scale and complexity were unprecedented.

“These events not only exposed weaknesses in the risk strategies of many organisations worldwide, they also challenged the insurance industry to develop policy wordings that are more responsive to this rapidly evolving risk landscape,” he said.

Marsh says the Canterbury earthquakes and Thai floods have shown that denial of access is not a short-term issue. Lessons learned include checking how business interruption cover responds to an event that leaves the property undamaged but with no customers.

Marsh says extended events can expose limitations in denial of access sub-limits and there can be disputes over whether coverage is triggered, such as when floodwater over roads prevents access.

The paper says last year’s public disturbances in Egypt and the UK have reignited the debate about what constitutes strike, riot and civil commotion and what constitutes terrorism, as interpretations can have a significant impact on policy response.

It says it is important for insureds to act on any local legislation, such as having to register damage with the police, and to take care in how loss is described and reported.

Lessons from the Australian floods are that policy documents must be reviewed carefully to ensure policyholders understand their cover and any flood exclusions or definitions, and that care is taken in describing and recording events for claims.

Marsh says contingent business interruption is becoming more important and the Japan earthquake showed up the complexity of quantifying losses as the impact spread.

It says regions stated in a policy can be important, along with whether indirect loss is secured and whether limits are sufficient.