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Avoiding coverage gaps: How risk management information software helps

I recently came across a useful article published earlier this spring by the International Risk Management Institute (IRMI) entitled mind_the_insurance_coverage_gaps“101 Commercial Lines Coverage Gaps to Avoid” (registration required). It’s a very good research piece in its own right for risk managers, but it occurred to me that it might be especially useful for risk managers who use or might be evaluating the benefits of risk management information software

I find that a RMIS can be a very useful tool in helping to identify coverage gaps. Read on for a couple of ways that a RMIS can help: 

  • At a high level, risk managers can use their RMIS’s insurance policy management software tools not only to record their policy details but also to define their current coverage from dollar one all the way to the top of their insurance-coverage tower. Here’s the process:
    • Begin at the lowest level, which may be a self-insured retention or deductible, and build your insurance coverage tower by type of loss (property, casualty, D&O, etc.).
    • Then, add each succeeding layer (primary, secondary, excess, etc.), all your policies, together with percentage participation by carriers, all the way up to your top layer that will cover your maximum probable loss.
    • Finally, produce a graphical display of your insurance coverage tower; this visualization will help you evaluate your coverage from a macro level and, as a result, ensure your exposure to risk is adequately covered.
    • Share this information with your broker to re-examine your insurance program and determine the most economical way to fill any gaps that may have been exposed.
  • In many decentralized risk operations, the process of gathering specific insurance coverage and related renewal data is dispersed and not consistently applied. One effective way to rectify that common shortcoming is by utilizing the automated renewal module of your RMIS:
    • Prepare a renewal questionnaire within your RMIS that includes the applicable coverage-gap items from the IRMI article that apply to your insurance program.
    • Then, make that questionnaire available, company-wide, as a data-gathering tool. Your RMIS should be able to support both web-enabled and electronic transfer of this information to minimize the time and risk management resources it takes to gather this data.
    • In concert with workflow automation in your RMIS, and based on answers supplied by operations in the questionnaire, your RMIS should be able to produce visual alerts and graphical reports depicting potential coverage gaps down to the lowest level in your coverage tower. As above, share this with your broker.

I hope these suggestions give risk managers a sense of how effective RMIS software can help to minimize and possibly eliminate coverage gaps. There is, however, another benefit from using a RMIS in this way: you’ll be maximizing the investment in your software, which will please the C-suite and help to justify further investments that make risk operations more effective and efficient.

Ken Ancona is a territory vice president with Aon eSolutions, based in the Chicago office. Contact Ken at ken.ancona@aon.com.

RMIS Guide


May 9, 2014

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