360 exposure review

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360° Exposure Review

Every organization is continuously exposed to a variety of both internal and external risks that may affect its operation or the fulfillment of it objectives.

What is a 360° Exposure Review?

• A method of analyzing and evaluating risks associated with any asset, activity, function, or process.

• Allows for the systematic evaluation and prioritization of risk in terms of likelihood of occurrence and the potential consequence if and when the risk event occurs.

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• Your exposure review not only allows for the identification, sourcing, and measurement of key business risks; it also positions your organization to effectively manage its total cost of risk.

• What assets need to be protected?• Who/what are the threats and vulnerabilities?• What are the implications if the assets are damaged or destroyed?• What is the value of the assets to your organization?• What can be done to reduce exposure to the loss or damage?


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The benefits of a 360° Exposure Review

• Provides the underlying analysis for which decisions can be made.

• Identify, define, measure, and prioritize critical business, financial, operational, and strategic risks.

• Allows for efficient and effective management of risks


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What can you expect to receive?

• Thorough identification of your risk sources• Effective prioritization of your organization’s key risks• Assessment of your current risk response strategies• Increased awareness of risk management• A foundation for developing and implementing solutions


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Medical Professional Liability

The obligation that a professional practitioner has to provide care or service that meets the standard of practice for his/her profession–ie, responsibility; when a professional fails to provide the standard of practice, liability refers to the obligation to pay for damages incurred by negligent acts.


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360 ° Exposure Review

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Medical Professional LiabilitySeverity – degree of financial impact

Frequency – number of incidents

Terms and conditions:

Consent to Settle Yes

Defense Costs Inside

Policy Form Claims-made

SIR $10K/$30K

L/R 45.6

Entity Limit Shared

Carrier ABC Physician Ins.

Current Premium $236,440

Expiration 01/01/2013

SIR $10K/$30K

Limits $1M/$3M

Financing 25/10/2.97%


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Medical Professional Liability - continued Severity – degree of financial impact


Market conditions:

• As of the date of this report, the professional liability market remains soft due to favorable claims activity. • It is anticipated that MPL premiums will remain competitive for the next 12-24 months.• Impact on premiums as a result of tort reform remains to be determined due to little to no actuarial data.


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Medical Professional Liability - continuedSeverity – degree of financial impact


Recommendation:

• Maintain minimum $1M occurrence limit with $3M aggregate limit.• Based upon our 10 year deductible feasibility study, a $25K deductible would have resulted in a net premium savings of $104,817 over the 10 year period reviewed.• Due to the number of physicians in your group, a vertical limit structure may provide up to a $24,500 premium savings.• Currently your entity is covered with shared limits. Separate limits are highly recommended.• Participation in risk management activities offers up to a 6% premium discount.• Recommend separate limit for entity (see proposal)


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Workers’ Compensation

Payments required by law to be made to an employee who is injured or disabled in connection with work.


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Workers’ CompensationSeverity – degree of financial impact



Carrier Travelers

Current Premium $19422


SIR N/A

Limits 500/500/500

Financing Annually

RTW Program Yes

Experience MOD 85.00


SIR None

Limits 500/500/500

Financing Annually


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Workers’ CompensationSeverity – degree of financial impact


Recommendations:


• HR to include workplace safety tips• Recommend increasing limits to 1M/1M/1M due to minimum increase in premium• Exclude physician members/directors with 10% or more ownership. Potential premium savings of $4,320

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Employment Practices Liability (EPL)

Risk Exposure

Employers have been facing rapidly increasing liability for employment related claims. From sexual harassment to discrimination in hiring, employers are now legally responsible for a broader rangeof employment related acts. This change has resulted in an environment of rapidly increasing employment claims.

Here are some of the primary claims brought against employers byemployees:

• Wrongful refusal to employ or promote a qualified applicant or employee.• Wrongful demotion, evaluation, reassignment, or discipline of an employee, including constructive discharge.• Harassment, coercion, or unfair discrimination as a consequence of such things as race, color, creed, gender, etc.• Defamation of character.• Slander or libel of an employee or violation or invasion of an employee’s right of privacy.

Do EPL claims occur? Yes, with surprising frequency and severity. Many small to medium sized businesses do not yet appreciate the significant employment exposure facing them. Employment litigation has increased in the last 10 years as a growing number of employees sue their employers for sexual harassment, discrimination and wrongful termination. These can run from serious sexual harassment situations costing millions to smaller frivolous claims. While accurate statistics arehard to determine, it is believed that the average EPL claim now settles for approximately $450,000. Frivolous claims rarely settle for less than $10,000 including legal fees.


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Employment Practices LiabilitySeverity – degree of financial impact



Carrier No Coverage

Current Premium

Expiration

SIR

Limits

Financing


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Market conditions:

The recent recession saw a rise in employee lawsuits against their employers for such claims as age discrimination, sexual harassment, disability discrimination, racial discrimination, and retaliation—the latter being an up-and-coming growth industry for EPL lawyers.While American firms were downsizing in 2010, the U.S, Equal Employment Opportunity Commission saw a record 99,922 discrimination claims filed in the fiscal year ending September 30. It was the highest number of cases brought in the agency's 45-year history.


http://www.eeoc.gov/

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Recommendations:


• Recommend $1M limit sharing limits with D&O. See proposal

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Directors & Officers (D&O)

Risk Exposure

Directors and officers at privately held corporations can be sued for a variety of types of actions, but most privately held corporations do not realize the need for D&O insurance until a claim is brought and lawyers are involved.The most obvious source of suits is shareholders who claim the actions of some or all of the officers and directors have damaged them. The non-shareholder related claims that privately held companies are exposed to compose the majority of all claims filed. These exposures include employee, client, competitor, and governmentrelated lawsuits. One analysis showed the following source of D&O claims:• Shareholders 20 %• Employment 15 %• Contract 30 %• Primary Business or Product 15 %• Unfair Competition & Trade Secrets 10 %

Many privately held corporations have failed to secure the necessary protection afforded under a Directors & Officers Liability policy. This failure may require significant financial and personnel resources to settle and defend lawsuits that could have been covered by affordable Directors & Officers Liability Insurance.• Quality directors will not serve without D&O coverage• The personal assets of directors and officers are at risk• The cost of defending a corporate lawsuit can be high• Judgments can be financially crippling• Bad business decisions can be more visible for a small business• Other potential claimants are: Customers, Regulators, Employees, Creditors. Competitors


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Directors & Officers (D&O)Severity – degree of financial impact



Carrier No Coverage

Current Premium

Expiration

SIR

Limits

Financing


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Market conditions:

Increasing claims activity


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Recommendations:


• Recommend $1M limit sharing limits with EPL. See proposal

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Fiduciary Liability

Risk Exposure

Do you have employee benefit plans such as401(k), retirement plan, pension planDo you have employee benefit plans such as 401(k), retirement plan, pension plan, employee stock-ownership plan, or health plan? If so, you need Fiduciary Liability insuranceWhat is Fiduciary Liability Insurance?Fiduciary Liability insurance provides coverage for plan administrators, human resource employees, and others acting in a fiduciary capacity and exercising discretionary authority to design, administer, and manage pension plans and employee benefit plans. It typically also covers financial institutions, such as banks or insurancecompanies, who also perform fiduciary duties in conjunction with the plans of their client companies.Common Fiduciary Liability Exposures• Mergers or Termination of Plans• Negligence in Administering a Plan• Plan Disclosures• Improper Advice• Imprudent Investment of Assets• Inadequate Investment Diversity• Conflict of Interest• Failure to Pursue Delinquent Contributions• Losses Arising From Administrative Errors• Breach of Duties Imposed by ERISA


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Fiduciary LiabilitySeverity – degree of financial impact



Carrier No Coverage

Current Premium

Expiration

SIR

Limits

Financing


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Market conditions:


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Recommendations:


• Recommend $1M separate limit combined with D&O/EPL policy. See proposal

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Crime

Risk Exposure

Do you have employee benefit plans such as401(k), retirement plan, pension planDo you have employee benefit plans such as 401(k), retirement plan, pension plan, employee stock-ownership plan, or health plan? If so, you need Fiduciary Liability insuranceWhat is Fiduciary Liability Insurance?Fiduciary Liability insurance provides coverage for plan administrators, human resource employees, and others acting in a fiduciary capacity and exercising discretionary authority to design, administer, and manage pension plans and employee benefit plans. It typically also covers financial institutions, such as banks or insurancecompanies, who also perform fiduciary duties in conjunction with the plans of their client companies.Common Fiduciary Liability Exposures• Mergers or Termination of Plans• Negligence in Administering a Plan• Plan Disclosures• Improper Advice• Imprudent Investment of Assets• Inadequate Investment Diversity• Conflict of Interest• Failure to Pursue Delinquent Contributions• Losses Arising From Administrative Errors• Breach of Duties Imposed by ERISA


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Carrier No Coverage

Current Premium

Expiration

SIR

Limits

Financing


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Market conditions:


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Recommendations:


• Recommend $1M separate limit combined with D&O/EPL policy. See proposal

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Contact Us

Scott L. Fikes 2901 N.W. 156th

Edmond, OK 73013Direct: 405.365.8999Fax: 405.563.9403Email: [email protected]

Sterling Management Group/Loftis & Wetzel is a member partner of BainsWest, Inc.

Bainswest is a consortium of independent insurance agencies across Oklahoma and Arkansas. As one of the Top 100 independent insurance agencies in the US, We pool our resources to give our customers the best choices in products for the best price. After all, what’s right for our customers always comes first.


360 exposure review

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