In June 2012, a landslide hit the railway lines near Gurtnellen in Switzerland. Although the property damage was limited, the business interruption caused Swiss Federal Railways (SBB) additional costs of just under 20 million francs. The entire financial loss was indemnified through SBB’s property insurance only because of the property damage caused to the tracks. The risk managers at SBB realised that, without the property damage, the rockslide would not have triggered an insurance payout, even though significant extra costs would have still arisen. Risks not involving property damage are highly diverse in nature, with IT and increasing digitalisation being the main sources of risk for so-called NDBI (non-damage business interruption) losses.
As the most important mobility service provider in Switzerland, SBB runs one of the densest and most heavily-used rail networks in the world. SBB can only achieve further growth by further intensifying its operations, which is only possible through the consistent changeover to digitalised train control systems. If these were to fail, individual high-traffic sections or even the entire country could be brought to a standstill for quite a long period of time. Besides the risks from IT, SBB was therefore looking for an insurance solution that would cover all the losses arising from any business interruption, irrespective of the cause. Within Corporate Insurance Partner, a “deal team” worked together with SBB to identify and evaluate possible loss scenarios, as well as their likelihood of occurrence and their financial impact. Following an international tender, Munich Re and two other risk carriers from the insurance industry were awarded the contract. We are drawing on the experience gained from this project to develop comparable solutions for other railway companies and corporate clients.