Q: Why do companies purchase insurance in the US? A: Because they have to.
For INSIGHT, risk is risk and most of it is not insurable. Unfortunately, in order to conduct business in the US, companies must have some type of insurance. So, why do companies purchase insurance in the US?
- Required by State Law – all 50 states require companies to provide Workers Compensation benefits to their employees and to purchase auto liability insurance for their vehicles.
- Required by Clients – due to an exponential increase in the cost of litigation in recent years, regardless if you are a large manufacture or a small general contractor, most companies ask that the vendor provide proof of liability insurance (general liability, professional liability, product liability, product recall)
- Required by Creditors – unless the company owns 100% of its assets, the mortgagee (usually a bank) will require property insurance for that asset until is fully paid.
- Needed to Compete – due to the rapid increase of health insurance costs in recent years, in order to attract the best workers, companies must offer some kind of good health benefits. (health, life, dental, STD, LTD)
INSIGHT believes that one of the riskiest activities performed in each organization is the purchase of insurance. For INSIGHT, insurance is not a “risk transferring” activity but a “risk trading” activity. The insured transfers the risk of a catastrophic loss to the insurance carrier and in return receives the risk of the carrier not paying the claim (carrier’s default and breach of contract risk). If this operational risk is not managed properly, the “ultimate” loss could exceed the risk before buying insurance (total loss + insurance premiums paid + the cost of litigation trying to recover from the carrier or its insurance agent/broker).
INSIGHT products help companies to increase their chances of recovery from their insurance policy after the occurrence of a covered claim.
The Insurance RFP© help companies oversee the entire insurance purchasing process to guarantee an adequate allocation of risk between the insurer, the insurer’s agent/broker and the company (insured).
The Contractual RM© help companies comply with the GL policy condition to obtain contractual liability coverage under the policy (an standard exclusion), and in cases where the loss is the result of a vendor’s negligence, to obtain coverage from the vendor’s policy instead.
The Insight Claims© help companies to investigate, administer and litigate (if needed) their claims to comply with policy conditions and determine the best way to use policy coverage.
The Insight BCP© help companies to stay in business by planning how to respond to an unplanned event that can cause death or significant injuries to company employees or the public, or that can shut down business, disrupt operations, cause physical or environmental damage, or can threaten the company’s financial standing or public image. Such an event could trigger multiple coverages under various insurance policies.