Unlike clothing, one size definitely does not fit all in the insurance industry. Companies come in a variety of shapes and magnitudes, each with with its own unique set of needs and risks. Because of the diversity of various organizations, insurance brokers and agents working with businesses to protect their property need to have the flexibility to provide unique insurance programs. Further, in order to offer the most accurate specialized property program for a client, agents and brokers must not only have a solid understanding of what a client’s potential risks are, but they must also build a solid relationship with these organizations so they know exactly what types of coverages they’ll need.
Protecting physical space
Every business needs property where the actual work happens. Whether this area is used to house manufacturing machinery, office technology or simply store inventory, there will always be a physical location that will be exposed to a variety of natural and man-made risks. Even purely e-commerce businesses still have a base of operations that staff must work out of, even if it’s simply a single room with limited space. Without sufficient insurance coverage in place, disasters and accidents have the potential to disrupt operations, which can lead to significant profit losses that could potentially even put the company out of business.
Protecting these physical spaces is extremely important to maintaining seamless production and uninterrupted operations for any business. Unfortunately, sudden and accidental disasters such as severe weather or a major fire can sometimes be unavoidable, no matter how many precautions an organization puts in place.
Polygon, a global industry leader in the business restoration industry, cited a range of problems that have the potential for creating significant damage to an organization, which can lead to:
- Structural damage to the building
- The inability for employees to access their place of work
- Major losses of inventory and perishable goods
- Supply chain interruptions or breakdowns
- Temporary or even long-term closure of the business
As noted by the Insurance Information Institute, national disasters alone lead to an estimated overall loss to businesses of more than $26 billion in 2015 alone, with total insured losses totalling $16.1 billion. While it can be nearly impossible to predict if and when a disaster or accident might strike a business leading to one of the above-referenced problems, a tailor-made property program can provide the financial assistance necessary to rebuild following a tragic and devastating event.
Wide range of businesses
As noted, companies come in a wide range of shapes and sizes. This means cookie-cutter insurance policies simply won’t do the trick when it comes to protecting an organization’s property from natural and manmade disasters. Some companies have a single location with hundreds of employees huddled into the space, while other organizations may have several smaller offices scattered across multiple states with a few staff members working at each one. Due to the wide range of differences in each place, agents have to be able to deliver tailor-made solutions specifically designed to address the uniqueness of each operation.
“Many organizations do not include property coverage in their enterprise risk management programs.”
Risk management departments at large companies are more likely to have more input and involvement in the decision-making process for buildings, while smaller operations may only have a single individual tasked with managing property risks. Although many companies have a partially or fully implemented enterprise risk management program, many of these organizations do not have property risks included in this program.
Further, although a business might have a risk management department involved in emergency preparedness, these often do cover risks in the supply chain. A threat to the supply chain can create a ripple effect of problems that threatens every other aspect of operations.
Not only does the particular type of business a company conduct determine what kind of risks the organization is exposed to, but so does the area where it’s located, the age of the buildings being covered and its occupancy levels and more.
Understanding the risks
Agents and brokers providing property coverage should thoroughly identify all the potential risks to a company. This can be a time-consuming process, but when correctly implemented, these can help lead to more precise property programs for the company. This lets agents hone in on the specific threats each client faces in the daily course of operations and craft property programs designed to protect against these risks.
It’s important for brokers to establish a relationship-oriented policy with these clients so they can learn as much about the potential risks that will factor into the creating a tailor-made property program. This includes working with senior management and enterprise risk departments to discern the full spectrum of threats the organization faces. Further, having a solid understanding of the market forces driving whatever industry the company works in is crucial.
Who can help?
Brokers and agents can partner with McGowan Risk Specialists to create tailor-made programs especially designed for their clients. These programs ensure agents can remain competitive while offering the best insurance protections for their clients.