Placement of Excess Casualty programs is an inherently pessimistic exercise. Together with our clients, we examine their risk profiles and explore various exposures faced by their businesses. Throughout this analysis, we are wired to think: what’s the worst that could happen? This question guides us as we ensure coverage fits risk and limits purchased correspond to severity potential.
Upon program renewal, we all happily shift back into a healthier mindset, a more normal state of mind. But it is increasingly apparent there’s a new “normal” – in which companies are facing risks that evolve faster than a 12 month policy renewal cycle. And when a catastrophic event occurs, companies are facing off against a 3-headed monster of legal liability, economic exposure, and reputational risk…while at the same time exercising human compassion for affected parties.
While there is no “one size fits all” roadmap to managing through a liability crisis, companies can take comfort to know the Excess Casualty marketplace is working alongside policyholders to support these efforts. A supplementary coverage grant and financial allowance is now a common inclusion in many Lead Umbrella policies. Designed to offer flexibility to suit a policyholder’s most urgent needs in the aftermath of a potentially catastrophic liability event, this coverage can contribute toward certain first- and third-party expenses.
Examples include engaging a specialized public relations firm or tending to impacted third parties’ emergency transportation and temporary living expenses. And while the specific provisions, conditions, and dollar amount may vary, there is a common purpose and message to these endorsements: your interests are aligned with the carriers’ to mitigate the loss impact.
We encourage clients to become familiar with the terms of this coverage ahead of actually needing it:
- Talk to your broker about how companies have benefited from this type of policy allowance.
- Consider how your company can employ this coverage to complement existing strategies to manage and mitigate catastrophic loss.
- Meet with the insurer to share your philosophy and collaborate toward agreed best practices.
- Establish mutual expectations with the insurer around the mechanics of this coverage – who are approved providers and can other providers be engaged? How are expenses approved? How are funds remitted?
- Ensure a copy of the coverage grant is available and visible to those in the organization who are closely involved in the company’s immediate response team. Keep it current by refreshing each year at policy renewal and consider including it as part of your company’s catastrophe emergency plan.
Insurers recognize there is value in supporting policyholders’ catastrophic loss mitigation efforts. By increasing awareness and examining how the coverage grant can best be deployed within your organization, your company will benefit as well. Lockton is ready to assist.
Your broker advisor and your insurer: company in a crisis.
This post is made on behalf of the Lockton Excess Casualty Practice.