Special Report: Fall Insurance Buying

Hard facts and data about their companies' losses can help finance chiefs and risk managers in their insurance buying.
David KatzSeptember 19, 2014

Many companies will soon be embarking on the tough wrangle often involved in insurance buying negotiations. This year’s fall policy-renewal season, however, may present some specific challenges risk managers and their companies’ may not have faced before, as insurers push hard to lay off new property-casualty and workers’ compensation perils.

14Sept_SRInsurance_GraphicWhile pricing is fairly level, reflecting competition in profitable insurance markets, insurance companies may push their clients to accept unprecedented cyber liability exclusions in their new policies, for instance.

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In such a bargaining situation, CFOs and risk managers would do well to confront their potential insurers with hard facts and data about their companies’ actual risks, the stories in CFO‘s Special Report on Fall Insurance Buying contend. That’s because a company’s loss experience and the quality of its risk management programs may be much better than insurers assume.

For example, as our lead story points out, commercial general liability (CGL) insurers, fearing that their clients may be hit by attacks similar to the recent “celebgate” and Home Depot hacks, are currently motivated to cherry-pick privacy and data-breach liability protection out of the broad coverage usually offered by such policies. To protect their companies against the financial losses that could accompany hacking incidents, CFOs need to come to the table with a complete profile of the strength of their company’s data security. And they need to have a good sense of whether they need the costly stand-alone cyber liability coverage that carriers are hawking.

In approaching coverage markets overall, commercial insurance buyers need to have the data to support the company’s internal “framework” for evaluating its risk, writes Rich Michel, a Wells Fargo insurance broker, as well as data about the insurance markets themselves. In his article, Michel describes a method of risk assessment that incorporates a company’s ability to sustain financial losses.

Finally, workers’ compensation auditor Greg Walker offers a nifty guide to understanding how insurance codes work, and how finance chiefs can use knowledge of the codes to keep carriers from bilking their companies. That, too, requires data about a company’s risk exposures.