Operational resilience and the case for dual supply

Speaking on the Showcase Stage at ILC’s Motor Repair event back in May, Eddie Longworth, CEO of e2e Total Loss Claims Management, explored how FCA Operational Resilience requirements are influencing insurer supply-chain strategy and why dual-supply models are becoming an increasingly important consideration for regulated businesses.

The presentation focused on a topic that sits high on the agenda of many insurance leaders but is often less visible to the wider market: how organisations ensure critical services remain operational when disruption occurs.

The FCA’s Operational Resilience framework requires regulated firms to identify important business services, understand where vulnerabilities exist and ensure they can continue operating within defined impact tolerances during severe but plausible disruption scenarios.

For insurers, that extends beyond their own internal operations and into the supply chains that support claims delivery.

Risks

Opening the session, Eddie highlighted what he sees as one of the biggest risks facing some organisations: supplier concentration.

Where large volumes of activity are managed by a single organisation, insurers may become exposed if that supplier experiences operational difficulties, capacity constraints or service disruption.

“The threat is that if you are a solus supplier to an insurer or have a substantive share of a market sector then you could be in serious trouble of losing business,” Eddie explained.

According to Eddie, the FCA’s expectations around operational resilience are encouraging insurers to take a closer look at these potential dependencies and assess whether alternative arrangements may be required.

He argued that businesses operating within sole-supplier structures should be proactively discussing dual-supply arrangements with regulated firms.

“Where solus supply exists, and/or you can see too much concentration in the hands of a single supplier; you should be talking to all the FCA regulated businesses you can find and suggesting a dual supply structure.”

Concentration risk

The concept of concentration risk formed a central theme throughout the presentation.

Eddie outlined how the FCA expects firms to identify vulnerabilities within their operational ecosystem, particularly where third-party dependencies could create single points of failure. Those expectations include managing supplier concentration risk, demonstrating credible contingency arrangements and maintaining appropriate oversight at senior leadership level.

He suggested that these requirements are likely to influence future procurement and supplier management decisions across the insurance sector.

A key argument presented during the session was that dual supply offers a practical mechanism for improving resilience.

Rather than relying on a single provider, insurers can distribute activity across multiple suppliers, reducing dependency on any one organisation while maintaining continuity should disruption occur.

The approach can also provide additional flexibility during periods of increased demand, such as severe weather events or industry-wide capacity pressures. By maintaining parallel capability, insurers may be better positioned to continue delivering customer outcomes while remaining within their operational impact tolerances.

Customer implications

Eddie also highlighted the customer implications of service disruption.

Within total loss claims, customers are often dealing with financial uncertainty, mobility challenges and heightened expectations around speed of settlement. Delays or disruption within the claims process can therefore have a significant impact on customer experience and potentially increase regulatory exposure.

The presentation argued that dual-supply structures can help reduce that risk by ensuring critical services remain available even if one supplier encounters operational difficulties.

Alongside resilience benefits, Eddie suggested that dual supply can also create commercial advantages.

With more than one supplier operating within the process, insurers gain greater visibility of performance and additional flexibility when allocating work.

The model enables ongoing benchmarking, service comparison and performance management rather than relying solely on periodic procurement exercises.

Governance

Another important aspect of the discussion centred on governance.

The FCA’s Operational Resilience framework places responsibility firmly at senior leadership level. As a result, Eddie argued that resilience planning can no longer be viewed solely as a procurement or supply-chain issue.

Instead, boards and executive teams are expected to understand operational dependencies, assess risk appropriately and demonstrate that suitable controls are in place.

The presentation concluded by positioning dual supply not simply as a procurement strategy but as a response to a changing regulatory environment.

As insurers continue to review important business services and operational dependencies, resilience is becoming an increasingly important factor in supplier selection and claims strategy.

Eddie’s message was that organisations should begin those conversations now rather than waiting for disruption to expose potential weaknesses.

As regulatory expectations continue to evolve, operational resilience is likely to remain a significant area of focus across the insurance sector.

For suppliers and insurers alike, understanding concentration risk and considering how best to maintain continuity of service may become an increasingly important part of future planning.

Supported by Corporate Partners Allscreens, BASF, e2e, Exclusive Repair Network, iBodyshop, Mirka, NWVA, Prasco UK, Repairify, S&G, Sherwin-Williams, Solera Audatex and Spire Drive, alongside sponsors Partly, Silverlake Automotive Recycling and Thatcham Research; as well as  Industry Body Partners AutoRaise, MIB, NBRA and Trend Tracker; and Vehicle Manufacturer Partner Stellantis, the event attracted close to 400 key persons of influence from across the UK vehicle repair and motor claims sector.