Recall Matters: Learning from the Past and Preparing for the Future

Posted by on September 18, 2014 | Be the First to Comment

production line in modern dairy factory
As with many developing niche insurance markets, the product recall market currently faces a potential crisis of confidence. Losses are building, new regulations and political issues are impacting insureds, and pricing competition and wording creep are making the sector less attractive to insurers.

Many brokers are concerned that client dissatisfaction with wording is making the sector more risky, and they are less keen to invest in expertise and grow their product recall teams. So how do we learn from the mistakes of the past and avoid a potential market dislocation in the future?

Find out my my latest white paper, which you can read here.

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How Analogies and Storytelling Enable Risk Managers and the C-Suite to Speak the Same Language

Posted by on September 11, 2014 | Be the First to Comment

(Photo by nostop.bg)

(Photo by nostop.bg)

 

It’s no secret the C-Suite and Risk Management professionals can struggle to communicate. I was recently fortunate enough to moderate a panel on this topic at this year’s Annual Workers’ Compensation Educational Conference. My fellow panelists and I provided our tips and tricks to risk managers for addressing a number of common issues:

  • Loss development
  • Effective collateral management
  • Accrual adjustments
  • Allocation models
  • Exclusive remedy

Beyond the basics of effective communication to management—be prepared, keep it brief and concise, and accentuate the positives—one of the most valuable tools that came up repeatedly was the power of analogies and storytelling.

Try to connect with the audience by drawing similarities to concepts familiar to them. For instance, a CFO is more likely to understand the need for collateral if you describe the liability in terms of bond obligation (a much more familiar concept for her) and use a whiteboard to illustrate how credit risk is created.

Another example is efficient collateral management. We often use a “cake” visual to illustrate this: the actuarial loss projection is the bottom layer (foundation) of the cake, and the baseline off of which all other adjustments are derived. We adjust that requirement based on the second layer of the cake; the financial strength credit rating, which we manage via our own credit assessment and relationships with the credit officers at insurers. Finally, the last adjustment is based on the collateral instrument (letter of credit, trust, cash deposit, etc.), which also impacts the final collateral demand. These three components illustrate a process that is rare in the brokerage community.

There are plenty of other great suggestions in the risk management community, but they all have the same focus: the C-Suite values subject matter experts who can effectively message material from their disciplines. Read my Property Casualty 360 article to learn more about this topic.

 

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Keeping It Confidential: Understanding the Risks of a Government Contractor’s Access to Classified Information

Posted by and on September 9, 2014 | Be the First to Comment

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Government contractors find themselves entrusted with access to highly sensitive data and information, which is needed to perform the services or provide the products detailed within the specifications of the contract. Even in circumstances where the original information is not sensitive or classified, government contractors are at risk of innocently transforming data into classified or sensitive materials by bringing together bulk data into aggregated sets.

In today’s digital world, this dynamic creates new risks for contractors to manage. Unauthorized access or release of protected data and information by rogue employees, criminals, nation states, and terrorist organizations has emerged as a top threat to contractors over the past several years.

Learn more about managing this risk here.

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Business Interrupted: Understanding How Business Interruption is Measured and Coverage is Applied

Posted by on September 3, 2014 | Be the First to Comment

Business Interrupted

Recently, an earthquake rocked Napa, Calif. with a magnitude of 6.0 and created an estimated $300 million in damages to both homes and businesses. Further estimates are still expected for public buildings and infrastructure, not to mention the losses felt by the 115 wineries that were affected in some way.

What happens if your business is interrupted by an earthquake, another type of natural disaster, or other unforeseen event? How can insurance keep you covered from any losses?

In this white paper, I provide five steps and several examples of how business interruption insurance can help businesses recover from loss of property, earnings, or even a suspension of business operations. While business may not be able to predict when an event will happen, they can protect themselves if it does.

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London Market Responding to Shifting Sands of Terrorism

Posted by on August 29, 2014 | Be the First to Comment

(Photo by visitlondon.com)

(Credit: visitlondon.com)

 

The War and Terrorism market in 2014 has not seen as large an influx of new entrants and capacity into the London market as in recent years. Instead, it has settled down to engage in intelligent underwriting and healthy competition for this class of business in a vibrant and ardent insurance arena, which in turn continues to produce low loss ratios.

Much of the drive toward selling terrorism insurance is not only the competitiveness of the terms available, but also the need to satisfy lenders and financial officers of corporations. After all, there is the ever-present scenario that in the event that there was a loss, why, if coverage was offered, was it not bought?

Presently, the London terrorism market remains highly capable and willing to offer capacity to almost any country in the world, with 158 countries enjoying the comfort of terrorism cover currently. Varying degrees of capacity allocation and pricing in some cases are of course a necessity, but underwriters continue to show healthy desire for risk in the push for a profitable economic bottom line, and a comprehensive and affordable product for insurance and reinsurance buyers alike.

Read my full piece that also appeared in Insurance Day, with additional thoughts on ISIS, Israel and Gaza, the Ukraine situation, and the upcoming TRIPRA expiration date in the United States.

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