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Risk Managers' Forum

Low hanging fruit is sweetest

The top five risk management gaps you can help your clients fill

By Erica Martinson, CHIC, CRM, MBA

Not every business can afford to have an in-house risk manager. Many small and medium-sized companies are looking to their insurance agent to provide outsourced risk management help. Here are five areas in which most businesses lack the risk management guidance they need, and where you can have a big impact without a big investment.

Vehicle policy. Companies with fleets will typically have a good set of policies and procedures governing driver qualifications, maintenance schedules, and the safe operation of the vehicles. Some include rules in their employee handbook about the use of cell phones while driving. But many companies overlook the most basic rules because they seem obvious (e.g., employees must have a valid driver's license in order to drive on business) or because there are no owned vehicles. Evaluating hired and non-owned exposures and putting appropriate risk management measures in place are equally as important as those for owned vehicles.

Create a list of key provisions that should be incorporated into their policy manual, including:

• Employees must have a valid driver's license if they are going to drive on business; their MVR (motor vehicle report) will be checked periodically.

• All applicable laws must be obeyed, including those covering seat belts and cell phone use.

• Employees should not drive when impaired in any way and may not drive company vehicles when consuming alcohol in any amount.

• Employees are responsible for all infractions incurred while driving, including parking tickets.

• If employees use their personal auto on business, they must have insurance in force that equals or exceeds the company's minimum limits (some employers require a higher limit, such as $100,000 combined single limit, to provide abigger cushion before their non-owned auto liability insurance picks up).

• Adhere to restrictions on use of fleet vehicles, such as not allowing non-employees to drive, using it for personal travel, etc.

You can also recommend that the employer do a periodic check on employees' drivers' licenses, both to confirm that they are in force and to check for poor driving records. The employer should adopt a standard for what is an acceptable driving record so that they are less susceptible to accusations of discrimination. Help your client find vendors to run MVRs on a regular basis.

Even simple tools such as a flyer outlining what to do in the event of an accident, which can be placed in the glove compartment of each vehicle, provides an opportunity for agents to reinforce good risk management practices and their role as a key resource for their client.

Contractual risk transfer. Companies often sign contracts without reviewing the indemnification wording or the insurance requirements. This is especially true of smaller deals that may not come under much scrutiny, or where the other party does not ask for an insurance certificate. Your clients may be accepting an unnecessary and inappropriate liability burden and missing opportunities to transfer liability to other parties.

Educating your clients is the key here. Give them a set of sample insurance requirements they can insert into contracts, where possible, and an example of balanced, limited hold harmless language. Help clients to spot contracts that require them to provide coverage they don't have, or that doesn't exist (many contracts still contain language that refers back to pre-simplification insurance forms). Remember to always recommend that your client seek legal counsel when negotiating contracts.

Funding the risk transfer. With more risk transferred to others through good contractual risk management, your client's next step is to ensure that the other party has insurance to back up the indemnification promise.

Even where formal contracts are not involved, all businesses purchase goods and services from others. Insureds look to their agent to provide certificates of insurance to their customers when asked. Ask them who's managing their certificate of insurance collection process. All too often the answer is that they're obtained only sometimes, perhaps only once when a contract is signed; that they're filed in a myriad of different places; or that your client doesn't ask for certificates at all. Some companies believe there's no use asking for certificates of insurance because no one will provide them; when this objection is raised, just remind them that you provide certificates when they are requested!

You can help your client get started with sample letters to send to their vendors, and a sample certificate of insurance. Have them set up a diary system based on the expiration date of the insurance coverages shown on the certificate, so they can obtain renewal certificates. Sometimes a vendor will tell your client that insurance is too expensive, and you can help here with a reality check on the cost of coverage.

Suggest that your client integrate the request for a certificate of insurance into their procurement or accounts payable process. While there are proprietary software systems available, people are more likely to accept an additional step in an existing process than a whole new process being added to their workload.

Cyber security on laptops. Companies routinely maintain robust firewalls and spam filters; they constantly change strong passwords and take other precautions to safeguard their IT systems. But then they allow employees to take flash drives and laptops in and out of the office at will with no restrictions. If I had a dollar for every company that fits this pattern, I'd be set with Starbucks lattes for life!

Talk to your clients about reviewing their IT security policies to ensure that this common gap is not endangering their IT system or sensitive information. If they have employees who travel on business frequently, suggest that they implement some guidelines, such as how to use the Internet in public places and safeguard their laptops in hotels, airports, etc.

Business interruption analysis/business continuity planning. For many insureds, the traditional business income worksheets just don't cut it. Today, income from many business models is not tied to the existence of a physical location. Licensing income, grants, and online sales are just a few examples. Income generated by employees who work remotely is on the rise.

Work with your insureds to analyze their specific circumstances to come up with an appropriate business income limit. These discussions will naturally lead into discussion of risk management measures that will reduce the business interruption exposure, like multiple backups for IT, and planning for alternative locations in advance of a loss.


Your carriers' loss control departments can provide resources that will help you talk to your clients about these exposures and others, and provide solutions. You can also tap resources from industry organizations and vendors including state and national agent associations, IRMI, RIMS, ISO, OSHA, the National Safety Council, etc.

Between the slow economic recovery from the recession and the recent rash of catastrophic events around the globe, businesses are dealing with many uncertainties. There's never been a better time for sound risk management to help stabilize a firm's internal operations and prepare them to better cope with external pressures. Positioning yourself as a key business ally by pointing out these and other risk management issues, and providing assistance in handling them, will win you increased loyalty from your clients, and maybe even increased referrals.

The author

Erica Martinson, CIC, CRM, MBA, has served as director of Risk Management Services since 2006 at The Rollins Agency in Rye Brook, New York. Prior to joining Rollins in 2000, she held positions as a marketing manager and account executive in several brokers' commercial lines divisions. A self-described "insurance nerd, " she holds an MBA from Pace University and a BBA from The College of Insurance, and teaches in the P-C brokers' pre-licensing education and CPCU programs at Westchester Community College. For information on CRMand CIC programs, go to


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