In the wake of September 11th’s tragedies, insurers are quietly making good on their annual promises to pay losses. Interestingly, all policies exclude war related losses in a very broad way. However, America’s insurers are stepping up to the plate in the biggest way they ever have, declaring these losses as “terrorist acts” and not excluding coverage. Does that affect you? Absolutely!
Businesses are noticing their insurance costs. Two years ago, at the bottom of a 10-year soft market cycle, costs were virtually insignificant, repre-senting only .0015 percent of gross revenues. Steeply rising costs now dictate very close attention to premiums and coverage.
This article will examine something that has been unnecessary for the last decade: hard choices in insurance coverage to keep premiums under control in a slow economy. Following are fundamental principles of insurance that help risk managers decide where premium dollars can best be placed.
As an editorial observation by this author looking back over 30 years of professional work in technology, I am compelled to draw some provocative conclusions. In the old days, when we re-wired boards to run IBM 80-column cards, we’d call Chris when things got tangled up. Then the generation of DEC (we called it Digital at the time) and running reliability came. IBM raised reliability to meet the DEC challenge. In recent years, however, I have observed that both hardware and software are being released long before bugs are identified and corrected. In part due to its complexity, I have probably never seen such unreliable hardware and software. So what are we doing? We’re calling Chris again.
Exacerbating this unreliability of hardware and software is a traditional tendency to automate existing functions and processes, rather than develop new technology-based business processes. Corporate America is now burdened with legacy systems, unlinkable, unavailable for e-business applications. Very costly to link, re-link. Low cost processing personnel have been replaced by high-end and scarce IT professionals. The weight of legacy systems may ultimately buckle and cripple our economic growth. Compound that with a blame-the-victim mentality, and experienced business executives will continue to suspend critical judgment to pour more resources into unexamined technological solutions.
All this adds to:
- the cost of doing business.
- the cost of economic recovery.
- customer dissatisfaction and intolerance.
All this at a time of great national threat to peace and security at home.