Staffing agency owners often worry about the possibility of a catastrophic loss, which can include major workers’ compensation claims, theft of company assets, or an employee causing injury to a third party. However, as long as the agency’s broker understands the risks specific to the staffing industry and properly insures the agency, there is a strong chance that these losses would be covered by insurance.
But what would happen to your insurance program in the event of a catastrophic loss?
Staffing companies, like yours, take various precautions to minimize exposure to such losses. These measures include placing employees in safe occupations, implementing financial controls to prevent embezzlement, and carefully reviewing contracts to avoid unnecessary liability. Despite these precautions, a catastrophic loss can still occur
Ultimately, the actions taken after a loss will largely determine the impact on your insurance program.
In my 20 years of insuring the staffing industry, I have witnessed clients experience multi-million dollar liability claims, severe employee injuries, and theft of valuable client and agency assets However, in every case, these agencies were able to secure coverage at their next renewal. The availability and cost of insurance were largely unaffected because of the actions taken after the loss.
To maintain a good relationship with your insurance carrier and reduce the likelihood of a similar claim in the future, consider these key steps after a catastrophic loss:
- Communicate and cooperate with the insurance carrier immediately after the loss. Provide the adjusters with all the necessary information to minimize the claim.
- Maintain open and honest communication with the decision-makers at your insurance carrier. Request a meeting with your underwriter and their manager to discuss the situation, as they have the authority to determine coverages, pricing, and availability for your organization in the future.
- Identify the cause of the loss. Was it due to an unexpected contractual liability, weak financial controls, inadequate computer system security, an unsafe work environment. modified or improperly guarded machines, or employees performing tasks they were not trained for? Understanding root cause will help you.
- Take corrective action. This is the most crucial step. Once you have identified the root cause, you must take action to prevent similar losses from happening again. While insurance companies understand that accident can occur, they expect you to address the underlying issues and prevent future occurrences.
Insurance companies are in the business of taking calculated risks and anticipate catastrophic losses, pricing their products accordingly. Experiencing a significant loss does not necessarily mean the end of your relationship with your insurance carrier, if you follow the steps outlined above. For more information, contact a Marsh McLennan Agency (MMA) advisor.
