"Education is what you get from reading the small print; experience is what you get from not reading it."
The quote may sound flippant but according to PEPCO insurance specialist Colin Paterson there are a worrying number of instances where companies are filing for claims only to find their insurance invalidated because they have not met a series of complicated and perhaps seemingly unrelated clauses and responsibilities found lurking in the dreaded small print.
The way policies are structured today tends to favour the insurer or seller of the insurance products, not the insured, and as policies become more complex and confusing and harder market conditions lead to insurers looking to protect their own financial interests, so the risks of small print "misunderstandings" and claims disputes increase.
Colin adds that over the years he has been surprised by the number of organisations displaying a level of naïveté or gaining comfort from misplaced trust when it comes to matters of insurance. They assume that if they have a large broker handling their insurance account then the matter is in hand and all bases are covered. There is also, in his experience, a lack of awareness at senior management level of the small print implications with regards to coverage or potential invalidation of insurance contracts. Policies are often worded such that should you not comply with a single clause somewhere in your policy, at any point during the policy term, even if the noncompliance is temporary, the entire policy could be invalidated. This, as you might imagine, is not crystal clear to the untrained eye and is frequently misunderstood from a governance perspective.
A key question CFOs need to ask themselves is whether they are receiving an advisory service from their insurance broker or if the broker is acting in an execution only capacity. Businesses and their processes change and the assumption that last year's cover and pricing remains "market best" usually warrants further validation. The cost to a business of an insurer exercising its legal entitlement not to pay out on a claim based upon small print contractual terms can clearly be devastating.
You also need to be planning well in advance, this is critical to ensure adequate time for a proper review process. Our specialists work on the basis of a minimum of 3 months review time before renewal to avoid a situation where the imminent and rapidly approaching renewal date is used as a negotiating tool to the advantage of the incumbent insurers and brokers alike.
PEPCO's insurance specialists operate in an independent capacity to support the client's insurance renewal process. We work together with senior management teams to provide an initial insurance review service free of charge to identify any initial areas of concern and deliver guidance confidentially, without any commercial conflict.
As insurance and procurement specialists we understand the drivers for a business to balance risk with costs, and in particular the need for CFOs to ensure best value. PEPCO has acted "Client Side" as a corporate insurance consultant to numerous organisations in a wide variety of sectors providing a valuable specialist support to portfolio companies. Typically when we engage our insurance specialists at a deeper level we can achieve a significant reduction in insurance renewal cost, with equal and often enhanced (or more appropriate) levels of insurance cover.
Our extensive experience and understanding of the insurance marketplace enables clients to be much better informed and ensure governance of this critical process. Management teams will be positioned to ask the right questions of their broker and provided with expert guidance throughout the insurance review process. Importantly our service remains impartial and supports the CEO or CFO in making informed commercial decisions, at the right time.
If you would like to know more about PEPCO's insurance services please contact firstname.lastname@example.org
or telephone 020 3008 7585. Testimonials
Colin used his expert technical knowledge to highlight areas where we could be exposed and explained these to us in simple language. We were then able to understand what we required out of our renewal process in terms of coverage and terms. We now have improved coverage, reduced costs and a better relationship with our broker. Colin understood our business, our risks and our aims which ultimately led to an improved insurance position. Finance Director
Fishers Service ltd
Colin was instrumental in deciding upon the strategy for the review, helping manage the review process and providing both industry expertise and a sounding board in order to ensure all risks were covered. By following this process I am convinced that ended up with the best possible deal available in the market place in ten11S of cover, price and broker service level.
This would not have been achieved without Colin's input. Finance Director
Hallmark Hotels Group
Colin's in-depth knowledge of the industry, his professionalism and his determination to deliver on the objectives of the engagement ensured we achieved a new cost base for the business and a greater understanding of the insurance market. Chief Financial Officer
I would describe the process we went through with Colin as an "insurance MOT" albeit one with an expert mechanic on hand. In terms of end outcome, I was more than happy that all key issues related to our insurance had been identified and appropriately addressed.
I would have no hesitation in utilising Colin's or PEPCO's services again in the future. Chief Financial Officer
Shimtech Industries Group
I am pleased to say that Colin delivered on all the objectives which also resulted in a change in the company's insurance broker. In addition Colin is very professional, has significant industry knowledge and a real desire to deliver for his clients. Chief Financial Officer
Leeds Bradford International Airport