Ginny Davis AIC, ARM is a vice president with Rutherfoord Assurance Services Corp. Mark Barden is an assistant vice president. Rutherfoord Insurance is a full-service insurance broker, established in Virginia in 1916 and among the top 25 privately-held brokers in the U.S. Rutherfoord provides property and casualty insurance, surety bonds, and employee benefits to a predominately commercial clientele. Specializing in managing risk for organizations throughout the U.S. and globally with difficult exposures, Rutherfoord is employee-owned with offices in Virginia, Pennsylvania, North Carolina, and Georgia.
Kerr: Insurance is not an area well understood by many business continuity planners. As they plan for their organizations, what types of insurance should they consider?
Barden: It is important to understand the business and the potential for loss. Use of a broker helps with that evaluation. You should understand what you can and can’t insure and know insurance isn’t always the answer. Many organizations overlook such insurance as business income insurance. Everyone thinks about a fire and the property loss associated, but they don’t consider the funds they will need to keep the business going.
Davis: It is important to have the right level of coverage as well. Bring in the organization’s financial management group on that determination. Underinsured and your policy will not provide necessary coverage, over-insured and you’re paying higher premiums than necessary.
Barden: Often, the worksheets used for these calculations are confusing. A good broker should be able to help with this and help understand the right amount of insurance. Another type of insurance overlooked is flood insurance. Most clients don’t believe that they need it. We recommend flood insurance to cover anyone and especially anyone in zones A or B. We have seen many companies not in those zones that have gotten flooded. Without the insurance, you are not covered.
Kerr: Can organizations get a better premium if they have recovery plans in place?
Barden: Within the underwriting process, if you can show that plans are in place for recovery and loss mitigation, you may be able to get pricing consideration for those programs.Kerr: What mistakes do organizations make in contracting for insurance?
Davis: Not choosing a broker who will take the time to get to know your business thoroughly, understanding all facets of the operation.Barden: Buyers will engage three or four brokers for insurance quotes. A broker should be a trusted advisor for the organization just like your lawyer, banker, and accountant. You should identify the broker with the right capability and then let them represent you in the market. It needs to be a relationship.
Davis: Have one broker consistently present your company to the insurance markets so that the underwriters fully understand the risk. Getting a broker with strong risk control and consultative claims professionals is important.Kerr: As an organization experiences an incident, what are the key things they should be doing or considering immediately and then on-going?
Davis: Safety of employees is the first consideration followed by mitigation of further damage. At times there may be delay in getting an adjuster onsite but reasonable steps to clean up, minimize damage should continue and should be thoroughly documented.
Barden: We monitor weather events and will actually send our customers documentation to help them get prepared if they are not already. These provide key tips on what the client can do to protect people and property.
Kerr: What should a client expect from an insurance provider in planning for risks as well as assisting with response?
Barden: People often don’t understand the benefits of broker services. We help clients look at the total cost of risk. That is, how risk impacts the business and how to keep the impact to a minimum, direct and indirect costs. It needs to be a partnership and open and honest communication is critical to ensure appropriate coverage.
Davis: A broker should have experienced professionals who are empowered and encouraged to think creatively. A broker should be an advocate for their clients, whether that means getting the best coverage available or making certain the claim service provided is the best in the industry.
"Appeared in DRJ's Summer 2007 Issue"