IRMI Update—Issue #11
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
February 20, 2001
In This Issue
Colleague,
Insurers are fast introducing special insurance policies to cover e-commerce
exposures. As I watch this occur I keep asking myself, "Are e-commerce exposures
really so different as to require entirely separate insurance programs to cover
them? Does a bank, magazine publisher, retailer, or manufacturer really need
two sets of direct and indirect property coverage and two sets of liability
coverage to insure its cyber and 'brick and mortar' exposures?"
Business in cyberspace is definitely increasing certain loss exposures, changing
other loss exposures, and introducing some new ones. Of course, insurers recognize
this and realize they need to tread carefully. That's why, for example, you'll
see changes made in the standard commercial general liability (CGL) form this
year to address Internet issues.
But are cyberspace exposures really so different as to require insurance
programs that are separate and distinct from the insurance already purchased
for a given businesses' traditional exposures? Frankly, I don't think they are.
Business is indeed journeying where none has been before, and specialized
coverage approaches coupled with careful underwriting are needed to properly
insure the resulting exposures. Developing special stand-alone insurance programs
that are underwritten by special units of insurers facilitates this process
and makes much sense at this early stage of e-evolution. It might be compared
to the development of specialized approaches to writing boiler insurance so
many years ago. Well, of course, the trend today is to write boiler coverage
simply by deleting an exclusion from the property insurance policy.
Will this happen with e-commerce insurance policies? Will insurers one day
write policies tailored to cover both the e-commerce and traditional property
and liability exposures of businesses on either a monoline or package basis?
I think the answer to these questions is "Yes," and I think this will occur
sooner than we might imagine if the e-commerce revolution continues at its current
speed. So get ready for some new educational challenges!
What do you think? [To see what readers had to say, check out IRMI Update #12.]
Have a great day!
Jack
Jack P. Gibson
President
IRMI
Modify the Debris Removal Provision. Property
policies often contain provisions that add coverage for the cost "of the removal
of all debris of the property insured hereunder...." Some perils, however, such
as windstorm and flood, may deposit debris on the premises that is not insured
property, but rather materials from elsewhere. Regardless of whether this debris
is insured property, it must be removed, often at considerable cost.
Modifying the debris removal provision by deleting the phrase "of the property
insured hereunder ..." would preserve coverage for what might otherwise be an
uninsured loss.
By: Evan Simmons Sr.
Executive Vice President
Palmer & Cay of Texas, Inc.
www.palmercay.com
Suggest a Risk Tip. Future issues of IRMI Update will include more risk tips from our readers. Send
us a practical tip (less than 300 words) for identifying and managing risks,
buying insurance, managing claims, or filling gaps in insurance coverages. We'll
acknowledge your contribution as we did for Evan.
We add new Expert Commentary to IRMI.com every week. There are now 111 articles
on IRMI.com, and many more are in production. Below you'll find summaries of
some recent additions with links to the articles.
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Spoliation of Evidence:
The Next Frontier for Insurance Coverage Battles—Over the past
several years, courts have fashioned a new cause of action deriving from
products liability cases when evidence is destroyed, lost, or altered: spoliation
of evidence. Does the post-1986 ISO, CGL policy cover this loss? See why
this author thinks so.
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Risk Quantification
in Rapidly Changing Business Environments—Rapid changes in business
have made planning more difficult and risk management more important. Whereas
business planning is based on forecasts of expected outcomes, risk management
is focused on deviations from expected outcomes. Learn how GARCH models
provide a significant advancement in the ability to forecast potential deviations
by characterizing volatility as an evolving process.
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Insurance Archeology
for Mergers and Acquisitions—One often-crucial factor affecting
both the advisability and success of a merger is the prospective partner's
insurance portfolio. Any corporation moving to merge or purchase a corporation
in the United States must recognize the litigious climate and defend itself
by making sure that both its own and its prospective partner's insurance
coverage is adequate. Learn more in this insightful article.
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The New OSHA Ergonomics
Program Standard—OSHA has issued its long-awaited final rule
for an Ergonomics Program Standard, 29 CFR Part 1910.900. This new standard
contains stringent requirements for most nonconstruction employers to identify
and abate musculoskeletal disorders. This article examines the new standard
and the possible costs to implement the ergonomics requirements.
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Linking Financial
Services—A Good Idea?—Is it a good idea for the insurance industry
to provide one-stop shopping for financial services? While not a new idea,
it does seem to be the wave of the future. This article explains that the
key, however, is not selling the services, but providing good customer service.
How Well Does That Blanket
Cover You? Blanket additional insured endorsements are useful tools
for preventing administrative oversights and reducing paperwork, but they also
carry risks for both the named and additional insureds. Discover methods contractors
and subcontractors can use to minimize the risks of breaching their contracts
when using blanket AI endorsements.
Reserve the Dates in
Your Calendar. October 29 through November 1—for the 21st IRMI Construction
Risk Conference. Join 1,000 project owners and contractors—as well as the risk,
insurance, and legal professionals who advise them—in New Orleans. You'll experience
a superior educational program, unparalleled networking opportunity, and the
city's unique culture and cuisine. Check out last year's speaker handouts for
examples of the types of topics covered.
The Wrap-Up Guide (3d.) Can Help You Make OCIP Decisions. This is the definitive blueprint
for analyzing the feasibility of an owner controlled insurance program (OCIP)
for a construction project. Updated and expanded just last year, it will give
you invaluable advice for setting up and administering a successful wrap-up
program. View a table of contents and order online today!
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