Product Update

Building a Safety Culture, Captive Insurance Companies, and Property in Transit Topics Discussed in Practical Risk Management

The latest update to Practical Risk Management adds two new topics and updates one.

Building a safety culture takes hard work and persistence, but the benefits far exceed the effort. When an organization's top management is dedicated to protecting the safety of its employees, it shows a commitment to employee well-being that improves morale. A strong safety culture will also dramatically reduce the number of injuries and their cost, which improves profitability. Indeed, building a safety culture is one of the rare opportunities for an employer to improve employee morale while lowering costs. This topic describes why a safety culture is important, what a safety culture looks like once it is in place, and what steps to follow to build a safety culture.

Until recently, captive insurance companies were only a consideration for large organizations with substantial risk management resources and the ability to tolerate substantial risk. Larger organizations tend to operate single-parent captives (see "Captive Insurance Companies") that provide coverage only for the parent and its subsidiaries. Single-parent captives require too much administration to be practical for many small and midsize employers. Recently, an alternative has gained popularity in the form of group captives. Instead of being owned by a single parent, group captives are owned by a group of members, usually from the same industry and in the same geographical area. They offer many of the same benefits as single-parent captives without the administrative burden, making them an option for even the smallest organizations. This topic describes group captives, explains how they work, explains the factors to consider when joining a group captive, describes the ideal candidate, describes the decision-making process for organizations considering joining a group captive, and describes the process for joining a group captive.

Insuring personal property when it is in an insured building can be complex, but insuring personal property is exponentially more complicated when it is away from the insured premises, or "in transit" as it will be referred to in this topic. Property in transit is more difficult to insure for several reasons. First, ownership of the property is not always clear, and it can change while the property is in transit. The terms of ownership are determined by a bill of sale, which will indicate when ownership transfers from the seller to the buyer. Second, there is no uniform guideline for who is responsible for damage to property in transit. There are laws and regulations that spell out who is liable, but there are some loopholes in those laws, and the contract for shipping—known as the bill of lading—can substantially alter the obligations established by law. Finally, even after it is established who owns property in transit and who is responsible for loss or damage during shipping, it is necessary to determine which of a wide variety of insurance products should be used to secure against financial loss.This topic includes an introduction to the transit terms that are relevant to insurance, an overview of the general categories of property coverage, a description of the various methods used to transfer liability for shipped goods, a description of the specific insurance products that cover goods in transit, and an overview of a process for protecting against financial loss to property in transit.

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