When designing an insurance program should we think about adding coverage or eliminating risk? Most brokers think about adding coverage while clients think about how they can curtail risk. You might think these opposing approaches would get you to the same place in the end but that is not necessarily true.
The problem I have encountered with new clients is that they were never aware of all of the different type of insurance coverages that are available in the marketplace. Couple that with brokers inclined to present only programs that they understand or are aware of and the result is an insured that is left vulnerable to having uninsured risks that otherwise could and should be insured. The conversation around risk management should first start with figuring out the risks that a client has and what their most valuable assets are. The risks should not be limited to what we think are “insurable” risks but all risks a company has.
Once we have identified what keeps a company CEO or CFO up at night we can then begin strategizing on the role insurance can play in reducing a client’s risk. I hear on a regular basis that a company’s patent portfolio is one of their most important assets but they have never had a discussion about insuring the portfolio despite the fact that commercial insurance is available to protect patents. Nowadays every broker and client wants to talk about cyber insurance, and everyone has that risk to some extent, but would a cyber breach or a patent infringement do more damage to your company? If you are a manufacturer is your broker talking to you about Manufacturer’s Errors & Omissions coverage? Is your company looking at acquisitions and if so how deep have the conversations gone in regards to tax liability and reps and warranties coverage? These are just a few examples and coverages that are not very innocuous but yet are still rarely talked about.
The point is, most brokers talk about coverage that is available and try to fit a client’s risks into the insurance box instead of designing the insurance program around the risks. Remember, an insurance broker represents you the client, and our job is to figure out your risks and then negotiate with insurance companies to get as much covered as we can. A broker’s job is not to take what an insurance company offers and make your risk fit into their product, but not negotiate with them to get the broadest coverage that is customized for what your risks are as a company.