Enterprise Risk Management Questions ?

Insurance Risk Management – Definitions

1. Insurance risk management
The use of insurance to manage risks. Generally, insurance is used to finance or pay for the damages or losses resulting from the occurrence of a risk

2. Business or corporate insurance
The insurance coverage or lines of insurance purchased by an organization to indemnify or compensate it for events resulting from fire, life, health and liability.

3. Renew or purchase business or corporate insurance
The process that an organization goes through in order to renew or purchase business or corporate insurance.

4. Write insurance specifications
For a specific insurance line, create a report that details a potential insured's desired and required insurance coverage terms and limits. Insurance specifications are used to bid insurance programs and clearly communicate the insured's coverage requirements.

5. Review insurance proposals
For a specific insurance line, evaluate proposed insurance quotes including pricing, rates, general coverage terms and limits to ensure insurance meets the insured's goals.

6. Evaluate insurance coverages
Review the pricing, rates, coverage limits and terms of various insurance lines to ensure the pricing, rates, coverage limits and terms reflect current market conditions, insured's risk profile and meets the insured's risk management goals.

7. Insurance coverages and limits guideline
A report that summarizes best practices as far as the types of insurance coverages, limits and terms that an insured should request from a vendor (depending on the annual revenue of the vendor) when the insured is contracting with the vendor to provide specific services or products.

8. Property and casualty insurance
Insurance placed on homes, cars and businesses. Generally, property insurance protects a person or business with an interest in physical property against its loss or the loss of its income-producing abilities. As far as casualty insurance, it generally protects a person or business against illegal liability for losses caused by injury to other people or damage to the property of others. The property and casualty insurance space can be broadly divided into two main segments: commercial and personal lines.
Examples of commercial lines include automobile, business owners (property and liability combined for smaller commercial customers), capital assets (output policy), crime and fidelity, electronic commerce, employment-related practices liability, equipment breakdown (formerly boiler and machinery), farm, financial institutions, general liability, inland marine (diverse commercial goods and properties), management protection, market segments, medical-professional liability, package policies (property and liability combined), property, umbrella and workers compensation.
Examples of personal lines include automobile, dwelling property, homeowners (property and liability combined), inland marine (diverse personal goods), personal liability (including personal umbrella) and watercraft.

9. Workers Compensation
An insurance program where an insured company provides benefits to employees who become ill or injured on the job. The employee becomes automatically entitled to receive specific benefits when he or she suffers an occupational disease or accidental personal injury arising out and in the course of employment. Workers compensation insurance is state-specific.

10. Audit Workers Compensation program
Carefully evaluate an organization's workers compensation program to determine if the program is achieving the organization's set goals (examples of goals include, reducing the frequency or severity or both frequency and severity of accidental personal injury or occupational disease, ensuring workers compensation premiums reflect the organization's risk profile and loss history, etc.).

11. Strategies for decreasing Workers Compensation costs
Review workers compensation program and propose best practices that when implemented an organization would experience a reduction in its workers compensation costs. Examples of best practices include performing a billing and/or utilization review on claims whose total reserves exceed a specific dollar amount, flagging potentially problematic claims for special handling, allocating workers compensation costs to business units and training employees on workplace safety.

12. General Liability insurance
An insurance line that covers an insured's negligent acts and/or omissions that result in bodily injury and/or property damage to others.

13. Professional Liability insurance or Errors and Omissions insurance
An insurance line that protects professionals such as accountants, lawyers, physicians, etc., against negligence and other claims initiated by their clients. This insurance is required by professionals who have expertise in a specific area because general liability insurance policies do not offer protection against claims arising out of business or professional practices such as negligence, malpractice or misrepresentation.

14. Employers Liability insurance
An insurance line that protects employers from liabilities arising from disease, fatality, or injury to employees resulting from workplace conditions or practices.

15. Network Security and Internet Liability insurance
Sometimes referred to as Cyber insurance, it is an insurance line that protects an organization against damage, theft or disclosure of personally identifiable information, denial of service attacks and transmission of malicious code and intellectual property and content infringement.

16. Establish, join or manage a captive insurance program
To establish a captive insurance program, a parent organization would create an insurance company that the parent would fully or partly own. This insurance company then issues insurance policies to insure the parent's risks. Depending on the type of arrangement and the captive company's domicile country, the captive insurance company may have to use a fronting company to issue its insurance policies.
To join a captive, an organization would apply to the owner of a captive insurance company and upon acceptance complete the necessary enrollment processes and procedures.
Depending on the type of captive insurance arrangement, a captive may be managed by the local staff in its domicile country with the oversight of staff of the parent company.
An organization may decide to form a captive insurance company for any of the following reasons:

  • Where commercial insurers are not responsive to its insurance availability, capacity, pricing or pricing stability needs.
  • Where the organization is not deriving sufficient value from its traditional insurance transaction.
  • Where the traditional insurance transaction lacks flexibility in coverage and/or limits.
  • To insure nontraditional loss exposures such as warranties, inventory shrinkage, patent infringement or mortgage default.
  • To cover losses that offer substantial cash flow advantages, such as those covered by workers compensation, general liability and automobile liability insurance contracts. Here, the captive insurance company can earn investment income on the cash flow generated by the loss reserves.

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