The graph below illustrates the results from your assessment for each of the five key areas of exposure. Focusing on each of these five areas will ultimately reduce your company’s overall exposure and provide opportunities for premium savings.
Insurance Coverage: 21 out of 25
Based on your responses, it looks like you have a handle on your insurance program.
While you are doing a lot of things right, here are some additional considerations that may strengthen your positioning:
- Meet annually with your insurance representatives to review your business plan and ensure coverage is aligned to your current (and planned) operations
- Have an independent and impartial third-party review your insurance policies
- Track and maintain a comprehensive database of all insurance underwriting information independent of your insurance broker’s data
- Ensure your risk management and loss prevention plans are communicated to the insurance carrier
- Notify your insurance representatives anytime a new entity is created, acquired, or new operations are established to determine coverage implications
Insurance & Broker Costs: 25 out of 25
Based on your responses, your insurance costs may be competitive.
Make sure you realize the most savings by implementing the following tips:
- Utilize an independent third-party advisor to assess your current insurance program and fee structure
- Talk to your insurance representatives about the key factors that are driving your rates – and what to do about them
- Review your insurance broker’s compensation structure and align it to performance and not premium
- Complete an annual service standard review
- Track and maintain a record of all deductible and under-deductible payments
Contracts & Third-Party Exposures: 14 out of 25
Based on your responses, you may have material exposures associated with your contracting process.
Effective contractual risk transfer is very difficult to achieve as intended. This is often the case as contract drafters do not fully understand insurance and how it will respond in the event of a loss. As such, contracts are generally drafted between the two parties entering the contract and do not contemplate the insurance carriers, the one who pays the claim. Without aligning the language between your corporate contracts and the insurance policies, both parties may unknowingly be voiding coverage or agreeing to items that are not insured or uninsurable. This can create significant balance sheet risk or the potential for legal disputes over who is ultimately responsible for contractual items that fall into this insurance contract void.
Tips on how you can strengthen your contract management process:
- Work with your insurance representatives to develop minimum insurance requirements by contractor type
- Rollout an approval process for any deviations to your insurance standards
- Have your insurance representatives review your base agreements to ensure contracts are aligned to insurance policy wording
- Implement a technology platform to track and manage third-party certificates
- Conduct a mock claim to determine how insurance policies will respond
Claims Management: 12 out of 25
Based on your responses, there may be room for improvement in your claims handling process.
Dealing with a large insurance claim can be overwhelming. Companies pay millions of dollars in insurance premiums every year, however when it comes time to utilize their insurance policy, they often encounter carrier disputes or lengthy delays in recovering losses. The fact of the matter is that there is no one looking out for your best interest throughout the claims process. Without understanding the nuances of insurance and the claims process, companies waste both time and money on dispute resolution. Furthermore, when a claim is finally resolved, companies have little understanding whether they received the best possible outcome.
Tips on how you can improve your incident and claims management process:
- Conduct an insurance audit to ensure you have no insurance coverage gaps
- Work with your insurance representatives to establish a claims support team and define roles and responsibilities
- Appoint an independent claims coordinator to manage and advocate on your behalf throughout the claims process
- Track all incidents and implement corrective action plans to reduce future likelihood
- Establish regular reporting to identify incident trends and inform decision making
Governance & Assurance: 5 out of 25
Based on your responses, it appears you have room to improve your risk management program.
Active risk mitigation provides the foundation for balance sheet preservation and can be leveraged for best-in-class insurance rates. Many businesses view insurance as the back-stop to material losses and fail to invest in the supporting risk management programs that can mitigate these losses in the first place. We often remind our clients that insurance is a contract, whereby the insurance carrier agrees to lend out their balance sheet for a predetermined fee (premium). The higher perceived risk for the insurance carrier, the higher the cost you pay. Companies that recognize the importance of risk management not only benefit from competitive insurance rates, but also experience a lower total cost of risk and increased profitability.
Tips on how you can strengthen your risk management program:
- Rollout a Risk Register to track and manage enterprise risks
- Evaluate and test key risk controls on a regular basis
- Establish Board level reporting to highlight priority risk areas and mitigation plans
- Integrate risk conversations as a standing agenda item in management meetings
- Communicate your risk plan to your insurance representative and insurance markets