Typical Risk Management Challenges Facing Fast Growth Companies

  • Your insurance is done on an annual basis and is out of date within 30 days of inception.
    • Regularly scheduled meetings or conference calls with your TechAssure broker, with a set agenda of review items is a great first step to avoid creating a situation in which a loss would not be covered. Including members of your HR, finance, legal, facilities, and sales team for 30 minute reviews can help ensure sharing the appropriate information.
  • Your pricing factors for your product and/or service are not updated when selling a new type of product/service and the incremental additional cost of risk hurts profitability of the new contract.
    • Establish in advance a protocol for your sales and pricing teams with your broker and encourage your staff to contact the broker for pricing estimates on the impact of new sales opportunities based on the type of customer; where the work is performed; size/scope of the new sale; or onerous contract terms. These are typically less than 10 minute conversations that can protect thousands in profit.
  • You make acquisitions without adequate due diligence on the cost impact on your insurance program and overall cost of risk.
    • An IT services company acquired a cabling and installation service contractor to expand the scope of their services. What they didn’t initially realize was that the Workers Compensation and Auto losses of the service contractor were roughly 10 times worse than average. Integrating the target company and its losses with the parent would have impacted total corporate profit by over $500,000 a year. The parent company’s TechAssure broker insisted on a review of the loss history of the target, discovered the claims history, and helped the parent a) restructure the pricing of the deal (which the target accepted) and b) implementing a plan for day one of the new subsidiary that incented the managers and workers to reduce claims – and taught them how to do it.
  • A lack of attention to the actual coverage terms and conditions of your General Liability, Professional Liability (E&O) and Management Liability (D&O, EPLI & Fiduciary Liability policies). Its imperative tat you review these with your broker and identify problems, particularly as compared to your own standard sales contracts/license.
  • Making insurance and risk management the responsibility of one manager and failing to share the knowledge.
    • It is imperative that “risk management” be a corporate concept and a process that is integrated into your overall management decision-making culture. Insurance is a great risk transfer tool, but its only one tool in your process of identifying and treating exposures to loss. Risk management doesn’t stand in the way of entrepreneurialism – it enables it. Without it, everything you’ve worked for can be destroyed, which is a strong disincentive for future economic growth.