insurance assessment

Risk Tip: Review insurance policies for consistency

Insurance policy provisions should be uniform as to named insured, notice and cancellation clauses, territory, etc.

Comment: All too often when reviewing policies we find that named insured’s do not match up from one policy to the next, notice and cancellation clauses are not uniform and on and on. We have reviewed thousands of policies and see this all the time. Unfortunately these may go unnoticed until a claim occurs. That’s when the heartache begins. You receive a letter denying or disclaiming coverage – now what?

Bottom Line: The insurance company will go by exactly what is contained in the insurance contract. Arguing intentions with an insurance carrier never really works out too well and can be very costly. If there is more than one entity, make sure they are listed or your contract contains omnibus wording. All notice and territory clauses should be uniform throughout each policy. If any of these clauses do not match up then severe coverage issues may result. Take the time to address it.

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Risk Tip: How to tailor a risk management program

An organization’s risk management (insurance) program must be tailored to its overall objectives and should change when those objectives change.

Comment: An insurance broker/advisor cannot recommend insurance products and services without knowing what the client actually does, how they do it and what is important to them with regard to their insurance program. Once it is known what they do, how they do it and what their objectives are they can be better advised in terms of coverage and exposure to risk. However, many times this step in the risk management process is overlooked or not addressed in the detail that it should be. Unfortunately, in the haste to sell product coverage issues, exposures are often missed. In addition, every business is a moving target, in that, it is constantly changing and/or the business environment around them is changing. To further that thought, brokers/advisors have to continually keep in touch with their clients in order to find out where they are taking their businesses and how they intend to go about it.

Have operations changed?
Are any mergers or acquisitions on the horizon?
Has there been a bump in the number of employees?
Are there any new tenants that may create an increased hazard?

By paying close attention to the client’s business operations and understanding their objectives, a true risk management program can then be developed and managed. Over time this will serve to limit their exposure to new risks and thus save money.

Bottom line: Have a detailed risk analysis performed of the business exposures you face along with a review of your business plan. Then develop a plan to address those exposures.

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Caveat Emptor: Let the Buyer Beware

An article posted by Property Casualty 360 states a simple truth — Insurance contracts are complicated documents, especially for the average consumer.

If you have ever gone through a disaster like a hurricane, flood, tornado, fire, power outage, or cyber attack you are probably familiar with the expression “Buyer Beware”. In fact after Hurricane Sandy, the Department of Insurance Commissioner stated that a commercial insurance buyer is sophisticated enough to understand the provisions of an insurance contract and regulatory protections are meant for the individual buyer. So, what was the Commissioner really saying? Businesses have the resources available whether they use them or not to become an educated buyer.

Regulators in a variety of states are looking to make it easier for individual consumers to obtain copies of policy language in advance of the actual purchase. It is not uncommon for a buyer to wait more than two months before seeing the policy they have purchased. In the insurance industry, most buyers (99%) get a brief description of what they are buying without understanding the full details. It is not until a loss occurs that they realize what they paid for was not right…buyer beware.

Here is a little tip … all insurance carriers can provide a sample policy in advance of a purchase. You just have to ask and then determine who is best to review. Is this an internal function, legal counsel, broker, independent advisor … what are the differences and where will you get the most thorough assessment of your coverage?

The phrase “Caveat Emptor” comes from the fact that buyers often have less information about the product or service they are purchasing, while the seller has more information … this is so befitting of the insurance industry when it comes to the buyer/seller relationship.

Take heed and remember “Caveat Emptor” each and every year when you purchase or renew insurance.