Blind Spots in Your Property/Casualty Insurance Program By: Eileen ClintonAAI, ARM, ALCM, CSP, CPCU
Have you ever been driving your car after you set your mirrors in place, cleaned your windshield, and did all your pre-check to make sure your visibility was good to go, and then coming up on your side (in your blind spot) is a motorcycle that you barely see at the last minute? Blind spots in driving present potential exposures which you are sometimes unprepared to react to. Blind spots in your Property/Casualty Program can amount to coverage gaps for key areas that could present serious potential financial exposures. A blind spot is “an area of a person’s view that is obstructed.” Like a blind spot, the functioning of your company can be potentially obstructed if there was a claim that was not covered.

So how do you review your Property/Casualty Program to find out if you have gaps or if your view is obstructed?

A comprehensive exposure analysis is needed for every commercial company and for non-for-profits doing business.

A comprehensive exposure analysis is merely a method in which you analyze your current potential exposures and then match them with a potential solution, whether it be insurance contract transfer, or Risk Management. It is also a means by which your Broker can be looking forward versus looking back for any potential exposures in your business. A Broker should always be asking their clients questions about, not only their current plans, but exposures in year 2, 3 or 4. That Broker really needs to understand your company’s operations in order to protect you from a “blind spot.” Some of the areas that could become blind spots include:

Workers’ Compensation:
  • Knowing your future experience modifier in order to compete for business or to bid on certain jobs.
  • Knowing when a small medical claim will escalate to a six figure catastrophic claim. This is important so that you and the carrier can intervene in order to prevent it from escalating. These predictive analysis tools are key to containing workers’ comp severity which is growing due to high medical costs.

Executive Risk - Directors & Officers, Employment Practices Liability and Fiduciary
Some blind spots in an Executive Risk Program can include:
  • Not having Third Party Employment Practices Liability. Third Party Employment Practices is when a non-employee brings an action against you for hostile work environment, potential discrimination, etc. 
  • A blind spot on the Directors & Officers Program can include not having “Side A” excess coverage. “Side A” excess coverage protects Directors & Officers from litigation or claims even if they are not indemnified by the by-laws of the entity. This is a very important blind spot that should be not obstructed.

Cyber:  We have heard a lot of discussion regarding Cyber exposures recently. However, not every Cyber Program is the same. We find that key “First Party” coverages such as a Cyber coach, forensic, business interruption, and payment of ransom fees are important components to include in your Cyber Program in addition to liability assumed in a contract, extortion and intellectual property coverage.

Auto:  The “hired and non-owned” physical damage which protects you when renting a vehicle for your company business but can also include “loss of use” of that vehicle which can be very expensive if levied against you from a rental company.

Manufacturing Errors & Omission:  A financial loss from delivering product to the wrong address or a bar code being inaccurate may not result in bodily injury or property but could result in a financial claim to you from your customer. Manufacturing Errors & Omission is a very important coverage in addition to Product Liability and Product Recall.

These are just some of the blind spots that you could see in the typical Property/Casualty Program. As Brokers we are Risk Managers and should be providing that service to our clients. Identifying these potential insurance blindspots and making program adjustments is like making sure that our mirrors are set up accurately, our windshield is clean, and we are scanning our environment every five seconds to prevent that obstruction.

Happy Driving!
 
Eileen M. Clinton

Eileen M. Clinton is currently the Senior Vice-president of Commercial Lines and Risk Management for Brown and Brown of Empire State and she has over 35 years of experience in the insurance field. Eileen holds a Master’s Degree from the State University of New York and is a Certified Safety Consultant,...

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