"Your primary loyalty should be to your skill set. It gives you the ability to move to wherever you want." This statement by Mark Lewis of IBM at the recent CPCU Society Annual Meeting and Seminars really struck home with me. To perform most risk management and insurance functions at a high level requires considerable knowledge and expertise. Unfortunately, however, the insurance industry has in the last 2 decades overlooked this simple fact as training and education budgets were cut and incentives to obtain insurance credentials were reduced or eliminated.

This shortsightedness often turns into complete blindness when insurers, agents, and brokers need to cut costs to maintain profits or reduce losses. We are now experiencing such a time with a soft insurance marketplace and a faltering overall economy. If you are in a position to influence training, education, and information budgets at your organization, remind your fellow executives that people—bright, well-trained, and knowledgeable people—are your organization's most important asset. This asset needs a continuing investment to maintain its value.

If you are not in a position to influence your organization's training and education budget, remember Mark's profound observation about your skill set. Invest in your own training and education to assure you are in a position to make the career moves that would be best for you and your family—whether they are with your current employer or a new one. When it comes to developing your knowledge and expertise, you are not at the mercy of your employer, and you don't have to spend all your savings to do it.

Does the industry's inattention to training and education concern you? If you were looking for a new job, would you evaluate potential employers' support of training and education as part of your selection criteria? What are some things that individuals should do to assure that they continue to develop their own insurance knowledge and expertise even if their employer doesn't help? [See reader responses].

Online continuing education courses can be an effective way to enhance your knowledge (and meet state mandated insurance CE requirements of agents, brokers, and adjusters) at a very low cost. IRMI has developed an excellent curriculum of high quality courses covering many different aspects of insurance and available through a state-of-the-art online delivery system. Learn more about our online insurance continuing education courses.

Thank you for subscribing to IRMI Update.

All the best,

Jack

Jack P. Gibson, CPCU, CRIS, ARM
President
IRMI

Risk Tip

PEOs Must Carefully Manage Property Damage Liability Risks—There has been tremendous growth in the employee leasing industry over the past 20 years, and risk management and insurance practices may not have evolved sufficiently to properly cover the nuances associated with the special arrangement between professional employer organizations (PEOs) and their clients. A prime example is policy terms that are dependent upon who causes a loss or who is injured—usually as respects "employees" as defined in the policy. When a company's workers are provided by a PEO, they are often not legally considered employees of the company (instead being the PEO's employees). This can cause unanticipated coverage gaps.

While this can affect several lines of insurance, let's consider the commercial property policy, where the term "employee" is not even defined. What if an employee of the PEO negligently starts a fire at the warehouse where he works and substantial damage is incurred? Since he is not technically the employee of the warehouse even though he works there, its property insurer may subrogate against the PEO after paying the loss. Making matters worse, the PEO's liability insurer may try to invoke the care, custody, or control exclusion to deny coverage for some or all the loss since all the workers in the warehouse are employees of the PEO and have complete control of the warehouse. The standard CGL exclusion applies only to personal property, such as the contents of the warehouse, but the uninsured portion of the loss could be substantial.

The PEO's exposure to loss from a lawsuit brought by the client company's insurer& can be mitigated by including a waiver of subrogation in the contract with the client, in this case the warehouse.& However, when the client company leases its space or building, there is also the possibility of a lawsuit brought by the landlord's insurer. To solve this problem, the PEO would need to have the client company obtain a waiver of subrogation from its landlord in favor of the PEO. Ideally, a waiver of subrogation provision in favor of both the client company and the PEO should be included in the original premises lease. If not, a separate waiver of subrogation in favor of the PEO should be sought in advance of any damage to the leased premises. A standard commercial property policy gives an insured landlord the right to waive recovery rights against a tenant even after a loss, but it does not give the landlord the right to waive recovery rights against an employee leasing company after a loss, even if the landlord wishes to do so.

The above example should cause risk managers, agents/brokers, and underwriters for PEOs and even temporary employment service companies to review employee leasing and temporary employment service contracts and their insurance policies to assure this gap doesn't exist in their programs.

By: Randy J. Forte, CPCU, ARM
President, Risk Management Consulting, Inc.
Johnston, IA

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 Randy.

What's New in Your IRMI Library

We have recently updated a number of the reference manuals in the IRMI library and published new issues of The Risk Report and Captive Insurance Company Reports. To make sure you don't miss any of this new information take 30 seconds to scan the "What's New" summary page.

For IRMI Online and Print subscribers

For SilverPlume Sage subscribers

Part-Time Home-Based Sales Position with IRMI

We are looking for people to sell subscriptions to IRMI Online by phone in tandem with computer demonstrations. You must have 3 or more years of sales experience and be a resident of Texas, California, Florida, Maryland, or Massachusetts. Set your own hours and earn commissions on your sales. This is a wonderful opportunity for retired insurance professionals who want to stay involved with the industry. Learn more on IRMI.com.

New Expert Commentary

There are over 1,100 risk management and insurance articles on IRMI.com. Below you'll find summaries of some recent additions with links to the articles.

Seek the Symptoms of Fraud—Scott Langlinais advises to forget the fraud triangle and fraud diamond. Focus on the root causes.
Construction Project Audits—Examples of Poor Practices—TJ Lyons shows through photos things to look for during a construction site tour.
Critical Role for the Chief Audit Executive: Aligning Risk Assessment—Mark Layton explains why today, a frank assessment of the true risks a company faces is crucial.

Conference Only 2.5 Weeks Away!

Now is the time to finalize your travel arrangements and register for the IRMI Construction Risk Conference, October 27-30 In Las Vegas. You can still reserve one of the final spots, and join 1,500 of your peers, at this premier networking and learning symposium. See all the details and register online today.

How To Ensure IRMI E-Mail Newsletter Delivery

We'd like to warn you about a potential problem with your receiving IRMI Update or other IRMI e-mail newsletters and suggest two simple steps to reduce it or eliminate it altogether. Many filters in corporate e-mail servers or e-mail client programs block newsletters like this one.

The first step to avoiding this problem is very easy. Simply make sure your e-mail program doesn't filter the messages by adding the IRMI.com domain to your "safe sender list." For example, if you use the current version of Microsoft Outlook (Microsoft Office Outlook 2007), simply do the following right now:

Click on "Safe Lists" in the toolbar at the top of this e-mail message
Click on "Add Sender's Domain (@example.com) to the Safe Senders List"

And you are done. Pretty simple, isn't it? If you use a different e-mail program, the procedure will be a bit different, but it should be just as easy. For example, in Hotmail, you can manage this function by clicking on the Options button.

The second thing you may need to do is ask your IT department to put the IRMI.com domain on the safe list to get through your corporate e-mail filter. Assure them that we don't share e-mail addresses with others and we don't send spam ourselves (as you know, we don't!), but they should be able to easily accomplish this.

Thank you very much for subscribing to IRMI e-mail newsletters. We sincerely appreciate the trust you have in IRMI and hope that you will take these steps to manage the risk of e-zine delivery interruption.

Please Share this Issue with Your Colleagues

If you haven't already done so, please send IRMI Update to your business associates. Thanks so much!

How To Subscribe/Cancel IRMI Update

IRMI Update is sent to subscribers by plain text e-mail twice each month. To initiate your free subscription, use the IRMI Update e-mail registration form.

IRMI Update—Issue #193

In This Issue

Message from the Editor