When Does a BI Value Stop Being the Right Number?

When Does a BI Value Stop Being the Right Number?
October 19, 2026 5 mins

When Does a BI Value Stop Being the Right Number?

When Does a BI Value Stop Being the Right Number?

Business Interruption (BI) values can become vulnerable to changing conditions before renewal. Energy companies should define reassessment triggers and test how the policy will respond as a loss develops.

Key Takeaways
  1. Reassess when assumptions change. Shifts in margins, throughput or recovery timelines can quickly change a BI value.
  2. Test the policy response. A stated volatility allowance may provide less protection than expected.
  3. Model each operation. Exposure, recovery and policy response vary across the energy value chain.

For energy companies, the assumptions behind a BI value can change materially during the policy period. Margins and throughput can shift, while repair timelines can extend. External events can also change the economics of an operation quickly. Yet the declared BI value and the policy provisions governing recovery may remain unchanged.

This raises a practical question: what should trigger a reassessment, and how will the policy respond if the exposure has changed materially?

A BI value has a shelf life

A BI calculation draws on assumptions about revenue, margins, production, throughput, fixed costs and recovery time. Those inputs can change at different rates and for different reasons.

For a downstream operator, a significant movement in crack spreads can change the earnings exposure associated with an interruption. For a midstream operation, a change in throughput or a prolonged constraint on a critical pipeline can alter the financial impact. Across the energy value chain, an extended repair or recovery period can materially increase the duration of a loss.

Organizations should establish materiality thresholds for reassessment, supported by a consistent methodology for revisiting the valuation when conditions change. Where a material change increases exposure, organizations may also need to consider whether to redeclare their values.

Aon’s approach to business interruption valuation provides a methodology for reassessing the valuation when material changes occur.

The percentage on a volatility clause tells only part of the story

A stated volatility allowance can overstate the protection available if the exposure has increased materially or operations resume during the recovery period.

The Lloyd’s Market Association introduced an updated Onshore Energy BI Volatility Clause in 2024 after carriers identified the previous version as unsuitable for partial losses. The revised clause was intended to address the policy’s indemnity exposure in those circumstances.

Organizations should model the provision against realistic loss scenarios rather than rely on the stated percentage.

Partial operations can change the claim outcome

Production may resume at 60% of capacity while repairs continue. The loss has not ended.

Revenue may recover partially while margins remain affected, equipment is still under repair or other constraints limit operations. The financial loss can therefore follow a different trajectory from physical production and the policy response may change with it.

Some onshore property provisions can reduce the applicable volatility cap when partial operations resume, potentially taking the cap below 100% of the reported BI value. The specific outcome depends on the policy wording and the circumstances of the loss. Organizations should discuss whether such a provision is appropriate for their operations and understand how it could restrict recovery.

As Greg Reynolds, Onshore Energy Property Lead at Aon, puts it:
“The critical issue is how the loss develops through disruption and recovery. Partial operations, shifting margins and repair delays can change both the earnings impact and the policy response.”

Effective modeling tests how critical assets, dependencies, mitigation measures and financial impacts evolve across different loss scenarios.

Quote icon

The critical issue is how the loss develops through disruption and recovery. Partial operations, shifting margins and repair delays can change both the earnings impact and the policy response.

Greg Reynolds
Onshore Energy Property Lead at Aon

The exposure differs across the energy value chain

Downstream businesses may be highly sensitive to refining margins, while many midstream businesses rely predominantly on fee-based revenue. LNG exposures may also be less sensitive to margin volatility depending on their commercial structure. A volatility mechanism designed around commodity margins may therefore have limited relevance for some operations, making alternative wording or a carve-out more appropriate.

The starting point should be the economics of the business rather than a standardized treatment across the energy value chain.

Build the review around triggers and scenarios

Scenario testing should focus on developments capable of changing either the exposure or the policy response:

  • A material change in crack spreads or other margin assumptions
  • A prolonged outage beyond the expected repair period
  • Partial operations during recovery
  • A significant change in throughput or production
  • A supply-chain constraint affecting restoration
  • A major capital project or capacity change

Test each scenario against the declared BI value, volatility cap, deductible, indemnity period and treatment of partial operations to identify where the program has headroom and where assumptions or terms warrant attention.

This should be an ongoing conversation through the policy year, not only as a discussion before renewal. When conditions change materially, organizations should work with their insurance partners to assess whether the valuation and policy remain fit for purpose. Diagnostics can support that review by helping identify how changing conditions may affect the exposure.

The questions worth answering before renewal

Four questions indicate whether the valuation and insurance structure are keeping pace:

  1. If operations resume at partial capacity, how will the policy calculate the resulting BI recovery?
  2. What would trigger a reassessment before renewal, and can the organization redeclare the value if the exposure has increased?
  3. Does the volatility provision provide enough headroom against the current exposure?
  4. Do the indemnity period and volatility provisions reflect actual recovery timelines and the economics of each operation across the portfolio?

A BI value is only reliable while its assumptions hold. Energy companies need to know when the number should change and whether the policy will still respond as intended when operations, margins and recovery timelines do.

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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