IRMI Update—Issue #3
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
September 12, 2000
In This Issue
Colleague,
The Ford/Firestone crisis will probably become a classic risk management
case study. Both companies made mistakes, and they combined to compound their
problems. As I write this column, the saga is far from over.
Probably the most important lesson that will be learned is the importance
of responding decisively to crises that may impact brand equity. Sure, the cost
to recall 6.5 million tires and settle the wrongful death lawsuits will be astronomical.
However, the lost lives are irreplaceable, and people will quickly lose confidence
in companies that fail to quickly respond when their products kill or maim.
And, when companies lose their credibility in the market, their entire business
franchise is in peril. There is no insurance for this. The ability of Ford and
Firestone to battle back from this crisis may depend on how they handle it from
here. On the other hand, it is also possible that the war has already been lost.
This situation should cause all risk and insurance professionals to explore
some important questions about their companies or clients.
- Have you identified the types of crises that could pose the most severe
threats to your brand equity?
- What will be your criteria for determining whether a recall is in order?
- Are your various business units sharing data that could help risk management
identify problems before they explode into full-scale crises?
- Is there a crisis management plan in place to deal with such challenges?
- How will you administer and fund a recall?
- Do you have suppliers or other business partners who could cause a brand-threatening
crisis?
- If so, do you have the communications and controls in place to quickly
learn of it?
- Have your executives been trained to respond effectively to the press
in a crisis?
I believe that effectively managing brand equity risks is so important that
I will make sure that IRMI provides you, our customer, with information on this
topic. One of the general sessions at the upcoming IRMI Construction Risk Conference
will focus on "Building and Protecting Your Brand." I have also invited an Expert
Commentator to give you insights into handling these risks. And this is only
the beginning.
Thank you for choosing to be part of the IRMI family and for recommending
IRMI.com and IRMI Update to others. We promise to continue to do our best to
keep you on the leading edge of risk management.
Have a great day!
Jack
Jack P. Gibson
President
IRMI
Communicate Marketplace Changes to Your Management
(or Clients). Make sure you are keeping your management (or clients)
updated on the changes in the insurance marketplace. Rates in the United States
are heading higher, and the last thing you want to do is hand senior management
a surprise at renewal. A helpful tool in explaining the reasons for the market
turn is a graph showing premiums paid, exposure bases (e.g., payroll, property
values, and revenues), and losses incurred and paid over the last 10 years by
line of insurance. In most cases, premiums will have headed down dramatically
while exposures and losses have trended upward, a situation that could not last
forever.
Suggest a Risk Tip. Future issues of IRMI Update will include risk tips from our readers. Send us
a practical tip (less than 200 words) for identifying and managing risks, buying
insurance, managing claims, or filling gaps in insurance coverages. We'll select
one or more to publish and acknowledge the authors for their contributions.
We add new Expert Commentary to IRMI.com every week. There are now 67 articles
in the archives, and many more are in production. Below you'll find summaries
of some recent additions with links to the articles.
-
Managing Electronic
Communications—E-mail is the Internet's killer application. Where
we once used to say, "Fax it," we now say, "E-mail me." But as wonderful
a tool as e-mail can be, for many e-mail is starting to turn from a productivity-enhancing
tool into a productivity problem. It also poses some unique E&O exposures
for agents. Learn about software tools and management approaches that can
help you deal with these challenges.
-
Third-Party Liability
E-Commerce Risks and Traditional Insurance Programs—This article
discusses e-commerce risks in the context of the potential coverage gaps
in traditional insurance programs for many corporate insureds. Its objective
is to help you better understand how to review an insurance program with
respect to e-commerce risks, as well as to evaluate the need for special
e-commerce insurance policies.
-
Insurance for Architect-
and Engineer-Led Design-Build Projects—This article reviews the
liability insurance typically purchased by architects and engineers, and
examines how well it works in design-build settings.
-
Enterprise Risk
Management in the Financial Services Industry—The promise of
ERM for financial services managers is that it can help them systematically
make business decisions that contemplate all types of risk (e.g., event
risks, operational risks, and financial risks). But, how close is this industry
to realizing the promise of ERM? A recent Tillinghast-Towers Perrin survey
reveals the answer.
- EPLI and Defense Counsel--Why Can't We All Love
One Another?—Counsel selection is one of the most important yet least
understood parts of employment practices liability insurance. This article
examines issues and problems that must be considered by risk managers and
agents/brokers.
-
Integrated Health Care
Delivery Systems Challenges—There are more than 850 integrated
health care delivery systems in the United States today, and they face many
unique challenges and loss exposures. This article highlights some of the
important issues that must be considered in managing their risks and structuring
their insurance programs.
The Employee Leasing Decision—Employee
leasing offers a variety of benefits, including a possible reduction in net
expenses. However, it is not a strategy without risk. This article reviews some
of the issues to assess when considering this option.
Online Underwriting Information
for D&O Liability Insurance—The availability of online financial
and other important data has made D&O underwriters less dependent on paper submissions,
allowing them to make faster, more accurate assessments that ultimately benefit
both parties to an insurance transaction. This article reviews some of the sources
of this data and how it is used.
Set for November 13-16 in Atlanta, IRMI's major networking and learning event
offers contractors, project owners, and insurance professionals four optional
1-day seminars and your choice between 16 concurrent workshops. It is filed
for CE credit in practically every state. Click here for a current status report
on state CE approvals for
agents/brokers.
View an agenda, session descriptions, and speaker list, as well as register
online at: http://www.irmi.com/conferences/crc/.
The Additional Insured
Book—This landmark work changed the approaches of many risk
and insurance professionals in granting coverage to others within their insurance
policies. Lawyers around the country who are litigating additional insured disputes
now consult it. Are you aware that the fourth edition was just released last
February? It was updated and expanded to cover many new topics in its 458 pages.
For other IRMI reference services, see the Products and Services section of
IRMI.com.
You can get continuing education credit in 44 states by taking correspondence
courses available on IRMI.com. View the course materials online, download the
material for offline viewing or printing, or order printed books. In 16 states,
you can take the test online and immediately learn your results. The tests boast
a pass rate of 98 percent! This can be a lifesaver for agents who need fast
credit to renew their licenses. See the course
catalog and CE FAQ section for more details.
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