In recent days the term, FLEXA cover has been widely mentioned whenever coming to insuring of risks either located overseas or where contingency business interruption (CBI) is involved. Examples of CBI related risks are those of extensions in business interruption insurance, namely, suppliers / customers, infectious diseases and public utilities.
So, what exactly is this FLEXA cover?
FLEXA, an acronym simply stands for fire, lightning, explosion and aircraft. If you are provided with such a cover, this means your policy can only provide cover against the following basic risks:
° fire and lightning
° explosion, excluding nuclear incidences
° aircraft falling and related impact
However in certain circumstances for an additional premium, the policy cover can be extended to include one or more additional risks like:
windstorm, vehicle impact, public events and demonstrations (i.e. riot, strike and malicious damage), flood and extreme tidal conditions, overflowing (including leakages) of watermains & apparatus, subsidence and landslides, self-ignition or spontaneous combustion or perhaps, even earthquake.
But most of these extension covers are likely subject to stringent underwriting scrutiny; main reason was the reinsurers that provide capacity and protection have imposed stringent underwriting controls over the manner insurers could provide coverage beyond the FLEXA cover for overseas or CBI related risk exposure. Why? In short, this requirement was triggered by the recent massive Thai flood….
In conclusion, this type of insurance has a more specific cover than the usual Industrial All Risks (IAR) or Large Specialised Risks (LSR) coverage that were previously widely available within the Malaysian markets prior to the occurrence of the Thai flood. But then, don’t worry…. as the application is to control overseas risk exposures and how CBI is underwritten in business interruption or consequential loss cover.
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