Risk & Business

Most small businesses run very tight every month with cash flows. Very few small companies in this US economy can create cash cushions to withstand shut downs or major disruptions in operations. Small business insurance can cover replacing the lost income when damages prevent or reduce the ability to keep the doors open, but not every thing is routinely covered. One of the areas that small business is exposed to is large regional losses of power. Most insurance policies do not cover loss of income due to power outages in a regional area. This was very evident when hurricane Sandy hit a few years ago. Business owners who sustained no damage still lost big as they could not open their shops because there was no power and no insurance coverage.  If you do not have long term self generating power strategy ( ie generators) then endorse your small business insurance policy to cover loss of income due to power outages. Most insurance companies will add this coverage to your policy. As mos...

A Texas court is currently deciding on a major issue regarding contracts and insurance. Here is the scenario. Oil giant BP has been sued for billions of dollars for the 2010 Gulf oil spill. They want to access some or all of the 750 million of insurance coverage the oil rig owners, Transocean, had secured to cover the drilling operation. BP and Transocean had a contract to work with each other and  Transocean had agreed to name BP as an additional insured under those policies.  There is however some issues with how the actual insurance matches the contract and it may come down to a missing comma. The courts now have to figure this out and millions of dollars are at stake. This is a important   lesson for small business. Every day business owners sign contracts which promise insurance coverage for other parties in the contract. If the actual insurance policies do not match what was promised and legally bound in a contract, problems arise when there is a claim.  Small ...

Home Depot just announced a major data breach  of customer records. This follows numerous other breaches over the last year from major stores and retailers. What is not reported are the cyber crimes committed against small business every day. It is becoming an epidemic. If small business is looking at insurance and traditional risk management to be the answer, I think they will come up empty.  Most insurance products today are very limited in coverage and current risk management strategies are also inadequate.  Using the 5 steps of risk management becomes problematic because cyber crime is hard to identify, analyze and control in a traditional risk management way. So what are businesses to do to combat cyber crime?  It is going to take some very creative risk management professionals to come up with new risk techniques. Things that the text books have yet to write about. With emerging risk comes innovation. Lets hope that the innovation comes quickly. Until next time...

Most business owners in the US do not have earthquake insurance.  The frequency of earthquakes is so rare in most parts of the country that insurance coverage is not bought. Last week Napa valley registered a 6.1 earthquake that caused an  estimated 4 billion of damage. Early reports state that most of this damage will be uninsured.  So how do insurance professionals get more people to buy the right earthquake protection. The first step is starting the conversation.  In most insurance meetings earthquake conversations are like earthquakes, very rare. It is time for agents and brokers to educate clients that earthquake insurance should be part of their insurance protection. In areas where quakes are rare, the insurance premiums are usually very affordable.  Lets hope that more business owners will consider earthquake coverage in the near future. As the damage from Napa, is revealed and more stories of uncovered damage surface, maybe the conversation of buying ear...