IRMI Update—Issue #111
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
April 19, 2005
In This Issue
Colleague,
If you are reading this in your hotel room in Philadelphia as you attend
the annual RIMS conference, I hope you will plan to visit us at our booth in
the exhibit hall. IRMI is in #1709. My colleagues and I would enjoy seeing you,
and you can enter our drawing for a subscription to IRMI Online when you stop by.
"Captives Built To Last" will debut in Las Vegas next week, and we still
have a few seats left for it as well as for the Dallas and Orlando seminar venues.
Kate Westover and David Monday will tell you what you need to know to determine
the feasibility of using a captive insurer to cover your company's (or your
clients') risks. Learn more or sign up at our Seminars section.
Thank you for subscribing to IRMI Update. This issue we highlight some interesting
articles we've recently added to our Web site that I hope you find helpful.
Read below to learn more.
All the best,
Jack
Jack P. Gibson, CPCU, CRIS, ARM
President
IRMI
Layer Your Equipment Security Techniques—Equipment
theft is a growing and expensive problem. While there are several available
physical security measures that can be taken, many work sites are difficult
to secure, so anything that can be done to make equipment more safe or less
desirable to thieves is vital. Because some equipment is more at risk than other
types, and some security techniques cost more than others, it is useful to place
equipment security techniques in layers—the easiest and cheapest at the bottom,
the more expensive at the top:
Layer 1—All units should already have a
serial number on them. This must be recorded somewhere to have any chance of
recovering stolen equipment.
Layer 2—Add your serial numbers to a secure
national database that is used by police to identify suspicious equipment. This
allows police to identify you as the owner of your equipment if it is found
during an investigation, even before the theft has been discovered.
Layer 3—Add as many high quality company
decals to the equipment as possible. Although a thief can remove these, this
will leave a trace that may help in an investigation.
Layer 4—Paint all or parts of your equipment
an unusual and bright color. This will deter thieves who fear being seen moving
such easily recognizable equipment.
Layer 5—Add Owner Applied Numbers (OANs).
Ideally these will be stamped on the equipment in both a visible and hidden
location, but even stenciled numbers can be useful as thieves often overlook
them.
Layer 6—Use locks and immobilizers. If
there is equipment nearby with no lock, it is that equipment that will be stolen.
Layer 7—Install tracking devices. More
information on this technology is in my March 2003 article.
To assess which layers to apply to what equipment, it is helpful to know
what type of equipment is most often stolen. Reports with this and other national
equipment theft statistics can prove helpful.
By: David J. Shillingford
National Equipment Register, Inc.
New York
DShillingford@NERusa.com
www.NERusa.com
Suggest a Risk Tip. Send us a practical tip (less than 300 words) for identifying and managing risks,
buying insurance, managing claims, or filling gaps in insurance coverages. Submit your tips. We'll
acknowledge your contribution as we did for David.
There are now 652 risk management and insurance articles on IRMI.com. Below
you'll find summaries of some recent additions with links to the articles.
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When Is Reinsurance
Not Reinsurance?—Mike Mead looks at the risk management implications
of reinsurance and excess insurance for captives. Lack of regulation and
standardization complicate the matter.
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Whether Mold Cleanup
Costs Are Covered Depends on Causation—"When a covered event
causes mold, the mold damage includes the cost of removal." Kent Holland
explains this ruling by the New Jersey appellate court on a homeowner dispute.
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Supreme Court Allows
Age Discrimination Claims Based on Disparate Impact—Based on
a March 30, 2005, ruling, employers must review their policies to assess
the impact on older workers and address any unintended consequences, even
if not deliberate. Paul Siegel explains.
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Insurance and the Law
of Unintended Consequences—Barry Zalma looks at how efforts by
and for the insurance industry have resulted in far greater problems: rising
costs, soaring litigation, increasing fraud, and a reputation seemingly
beyond repair.
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Deming's Point #5 as
Applied to the Insurance Industry—When focused on the customer,
continuous process improvement, through process mapping, has transformed
insurance organizations. John Pryor provides some examples.
IRMI has launched a new insurance continuing education program for agents,
brokers, underwriters, and construction-industry professionals. The Construction
Risk and Insurance Specialist (CRIS) continuing education program is a specialized
curriculum consisting of five courses presented entirely online. Those who complete
the program may display the CRIS designation to certify their construction insurance
expertise and earn state insurance continuing education (CE) credit in the process.
The CRIS program is quite affordable, and insurance CE credit is also available
in many states. The self-paced courses and exams may be taken from any computer
with Internet access. Learn more.
In the IRMI Update 110 Message from the Editor,
Jack Gibson listed some of the barriers to disaster planning and asked readers
for their thoughts on how to overcome them. Below are some of the responses,
edited for length and content.
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One of the most effective and communicative languages in corporate America
is the profit and loss (P&L) statement, return on investment (ROI) analysis,
and balance sheet integrity. A risk manager needs to communicate to senior
management—in their language—and outline the benefits of a business continuity
management plan and the corresponding cost to implement. The cost must be
realistic and not be over the top by "matching" the potential risk, not
the absolute worst-case scenario.
My advice to brokers/agents is to be proactive in the suggestive, developmental,
and implementation process. A reactive broker will find himself/herself,
chasing an aggressive, proactive prospector who is hungry for new clients.
I would also recommend that brokers create "off-the-shelf" products such
as business continuity management plans, return-to-work programs, insurance
audit procedures, etc., to immediately respond to the clients' needs.
—Dwight Garner, VP Risk Management, Setnor Byer Insurance
& Risk, Plantation, FL
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I read your comments and thought about our agency's struggle through
three hurricanes last fall and the first tenet of emergency care—you can't
help someone if you are ill prepared ... When I first read your commentary
I thought not of helping our clients prepare but of our industry (agents
and carriers) being prepared. We can't help our clients if we aren't "up
and running," and power is the lynchpin. You can't even use the phone (most
phone systems use computers which require power to operate), and how about
that paperless office system? Need a computer to look up the dates? Oh,
I'll just use my laptop. Oops, forgot about the network.
To prepare for the unknown disaster we must remember the four "P's" in
order of importance. First P is PEOPLE—we need a system to able to contact
through cell phones and locations of our fellow staff members. We must make
sure their family members and homes are taken care of. Once they are taken
care of, we can then help others and our clients. Next is PLACE—our place
of operations. If destroyed or damaged, where will we work, and what will
we need to do our work? Third is POWER. So our office is intact, but without
power. How much locally generated power we will need to run minimal operations
to service our clients (be sure to include the coffee maker in the assessment
and don't forget about Internet access in case the telephone poles fly away)?
And the final "P" is PERFORMANCE—what must we do to be able to perform for
our clients who will be in the "same boat."
The old axiom "charity begins at home" should be changed to "disaster
preparedness begins at home," for if we prepare ourselves and our businesses
for all contingencies, then we'll be better able to help our clients with
their disaster plans. But try not to wait and learn these lessons firsthand.
I don't recommend it!
—Wesley Wurth, Director of Underwriting, CHAPP, Inc.,
Dundee, FL
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"Speed"—one word says it all. In a disaster, a firm needs to be prepared
for speed—a speedy response! In a manmade building construction disaster,
you need speed to
- Secure the site from any additional loss
- Get your insurer and their professionals on-site to assist with
contingency planning
- Get new space for the business/school to continue their business
mission
- Lock-in the best and most qualified local and national design professionals
to assist in the post-disaster forensics that will be required, before
the responsible party(ies) lock in these professionals for their side
- Control the press and how the story is reported
These statements come from firsthand recent experience on a construction
disaster, with potential claims in the millions. Be prepared in your planning
for speed. Control the situation before it controls you!
' —Tim Trachsel, AIC, Principal/Manager, The T2 Group,
LLC, Cincinnati
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Here are some thoughts about the impediments to disaster recovery preparedness
you mentioned:
- Lack of a senior level business continuity management (BCM) champion—usually
caused from incompetent senior level executives.
- Reluctance of business units to spend time and money—often used
as an excuse for not doing the job properly. If business units had no
time or money to spend for BCM, they would be ignoring their customers'
needs. These businesses probably will not exist long.
- Resources are already constrained—this is always the case when there
are a lot of resources. If you implement BCM properly, you will find
why resources are constrained. Then develop solutions.
- "It will never happen to us."—Every ruined company thought this
before a surprise disaster occurred. Do you really want to become that
kind of failed company?
—Susumu Ichinoseki, Independent, Japan
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