Which Insurance policies should the corporates buy, a Finance manager’s guide
14 Jan 2019 by Edify Team
Company Managers buy insurance regularly and are well educated on how to optimize purchases. Purchase of insurance products is often focused on products which can provide immediate salvation, read “claims”. It is then natural that the most bought products are Group Medical policy and Laptop All risk policies even if the claims are never greater than a few lacs. Insurance started with a premise to prevent catastrophic losses, the name so used to denote losses which can potentially run the company out of business.
Corporates invest significant time and effort in asset purchases but not a fraction insuring them. A fire or a flood may have a potential to cause losses worth crores if assets are not insured or underinsured. Still asset insurance does not occupy the right mind share. How often a fire or flood happen anyway. Finance Managers also believe that insuring landlord assets in their rented plug and play offices is not their responsibility. It is important to check the lease or rental conditions to make sure.
The buck does not stop there. A Software company is always exposed to a claim for possible service deficiency or product failure. A product manufacturer needs to consider if its products have a potential to cause harm leading to a claim. A financial Crime or Cyber hack can lead to huge losses to the company. Such claims can be catastrophic if they come. Managers need to take time to reflect on the possible implications of such liability claims.
For the risk manager, it is about spending time where the money is, buying insurance for events which have a potential to cripple finances. No one knows Financial accounting and control better than Finance Managers. It may be a good idea to meet Insurance professionals to know your insurance requirements better.
Indian risk appetite makes the average Indian believe that nothing bad can happen. Every business has a Plan B, a contingency plan to fall back on. Ironically most Indians do not have a plan B for their own homes and families.Read More
Many insurers offer a professional indemnity (PI) policies. Corporates often assume that buying from a reputed insurer ensures the best product. One should know that an Insurers restrict their risk, even if it fetches a lower premium.