IRMI Update—Issue #145
An E-mail Newsletter for Risk and Insurance Professionals
ISSN: 1530-7948
September 20, 2006
In This Issue
Colleague,
"Insuring anything is a form of evasion of responsibility as it generates
the feeling that 'I've taken care of that so I don't need to pay attention any
more,'" argued risk management pundit Felix Kloman in an e-mail to me several
months back, "I'm sure that you will take issue with me on this."
While I don't completely buy into this view, I do see his point. For many
years, I've watched as organizations tried to delegate risk management with
a premium payment, thinking that a risk of loss is "handled" simply because
it is insured. Of course, this is a very short-sighted view as it completely
overlooks so many other costs and considerations. While the stated purpose of
insurance is to return the person or organization to its pre-loss condition,
it always fails to do this. There is little or no recovery for the lost business
opportunities, time, reputation, customers, employee morale, etc., that stem
from property, liability, or workers compensation losses. In fact, it is not
uncommon for these uninsured losses to exceed the insurance recovery.
Sometimes insurance acts like a barbiturate that lulls us into a false sense
of security. Look at a business that knowingly retains significant risk, and
you will see superior risk management programs in place. It is likely that these
superior programs also translate into business advantages—such as higher quality
products and improved worker productivity—that lead to higher profits. This
is why organizations should retain as much risk as possible, using insurance
only as necessary to protect against truly catastrophic loss.
What do you think? Does insurance sometimes remove the motivation to implement
superior risk management programs? Have you ever seen an organization greatly
improve its risk management program after deciding (or being forced by the market)
to retain more risk? Has the fact that a risk was insured ever led to a bad
management decision by your firm (or your clients' firms)? In general, should
most companies assume more risk than they do and then do a better job managing
the risk they assume? [See reader responses.]
Have a great day.
Jack
Jack P. Gibson, CPCU, CRIS, ARM
President
IRMI
You've Got E-Mail—Don't Let It Get You—E-mails
routinely are included in "documents" requested during the litigation discovery
process, because smoking-gun messages often are found. To protect your organization:
- Have a formal policy on e-mail use, and have employees acknowledge in
writing that they will follow it. Include the right to monitor employee
e-mail. Main rule: Never send an e-mail you wouldn't want a jury to see.
- Substantive e-mails to and from your attorney aren't subject to discovery.
Subject lines should include something like "Privileged and confidential:
attorney-client communication." In the text, ask for the attorney's guidance.
- Sometimes it's best to communicate by picking up the phone or walking
to the other person's office and having a conversation.
- In e-mails, don't exaggerate, speculate, insult anyone, use vague terms
such as "substandard" or "troublesome," or use legally loaded terms such
as "negligent" unless you are sure the term is appropriate. Consider "keyword"
tracking software.
- Include e-mail in your document retention policy. Archive systems can
allow you to find the files you need without wading through all the others.
Be wary of using every archival technology available, however. Metadata—data
about data—can be valuable to an opposing counsel.
- At the first hint of legal action, place a hold on any documents that
might be relevant, and don't allow them to be destroyed, regardless of your
retention policy.
- Remember, "deleted" items still reside on a server with a "not used"
status, and can be retrieved until they're overwritten.
- "Blogging" risks can include defamation, libel, invasion of privacy,
infringement of intellectual property, and securities laws violations. Insurance
is available to address these exposures, which typically fall outside the
"advertising injury" protection of a commercial general liability policy.
If you include blogging standards in your e-mail policy, reference your
existing company policies regarding nondisclosure of confidential information,
discriminatory conduct, etc.
By: William Henry
Vice President, The CIMA Companies, Inc.
Alexandria, VA
bhenry@cimaworld.com
www.cimaworld.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 William.
There are now over 800 risk management and insurance articles on IRMI.com.
Below you'll find summaries of some recent additions with links to the articles.
Practical Risk Management Is Now Available
from IRMI—Since 1974, Practical Risk
Management—The Handbook for Risk and Financial Professionals has been
one of the world's most widely used risk management references. Known in the
industry as "the Green Book," this resource for best practices has helped risk
professionals at all levels make sound decisions and take action. See the Table
of Contents and how you can become an even more valuable adviser to your clients.
"Ethics for Property and Casualty Insurance Professionals" is one of our
many online insurance CE courses. Passing the course will not only give you
4–6 hours CE credit, depending on your state, but also meet your state's ethics
course requirement. And you won't believe how reasonable the cost of these courses
is. Check all the
courses out.
Kevin Merriman, a partner with Goldberg Segalla LLP in Buffalo, New York,
writes the Case of the Month column for IRMI.com. He lectures and writes extensively
on insurance law issues, and counsels insurance companies on a broad range of
commercial and personal lines issues, including auto, homeowners, commercial
general liability, commercial property, law enforcement, public officials, employment
practices liability, and workers compensation. His insurance law column provides
legal perspectives of what insurance policies cover—and what they don't—as determined
by recent court decisions. For more information on Mr. Merriman, see his full biography and a list
of his articles.
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