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Restructured? Reassessing Your Risk & Coverage Profile.

September 24th, 2009

            Over the last 2-years, there’s not a single person in my network that has been immune to what has transpired with the economy, both domestically and globally.  Some have been fortunate, as we have, to experience growth, in a sector that has been heavily hit and seen many players eliminated or significantly downsized. The efforts to adjust to these changes have been to scrutinize every revenue and expense stream within the company and determine where changes can be made. One of these areas, Insurance Expense, can be a pretty significant area depending on the industry you find yourself working in. From the area of workers compensation, to product & general liability, to health, it can be significant. However, the focus should not lay solely on the quotes provided by your agent at the time of renewal and what a new agent might be able to save you.

 

            If you’ve either seen a significant decrease in the scope of your business, or lucky enough to grow, then what you should really be doing is diving into the different elements of your insurance coverage to determine if that coverage is appropriate for the company.

 

More specifically:

Ø  Was your policy initiated many years prior, in a period where coverage was provided to you as a new entity?

Ø  Have you seen a major change in your employee count and the scope of activities that they are involved with?

Ø  Has the company undergone a significant change or expansion in the supply chain or the amount of product moved?

Ø  Does the current liability umbrella provide enough coverage for where the company has progressed to?

Ø  Do you have coverage for your Directors & Officers? Is it sufficient for the scope of business?

Ø  Do you have the proper levels of Employee Practices Liability for the company & is it commensurate with the risks of your industry?

 

            Conversely, if you’ve been unfortunate enough to see a significant decrease in the size of the company, are you over-insuring the company and paying too much in insurance expenses?  How many vendors are you having to deal with and can you effectively manage your insurance portfolio? Do you know what your areas you might be lacking in your current coverage?  In such a litigious environment, the cost-benefit of proper insurance coverage cannot be over emphasized. Although this area can represent a large expense for the company, this risk of a lawsuit or other event that exposes the company will be multiples of what your actual expense is. 

 

            If you have a good insurance partner, then there are also ways that you can decrease your expense exposure with respect to internal education programs, safety programs, and other employee involvement. There are also opportunities to look at deductible amounts, although this will not have as drastic an effect as the increase or decrease in your overall coverage amounts. Do you know where you stand on your insurance portfolio and scope of coverage?

 

Thanks for reading . . . .

 

Jeffrey Ishmael

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