Risk transfer is defined as transferring risk from one party to another party who’s willing to accept the risk. It’s a broad definition. So, what does it mean to property management companies and why is it important?
Almost daily, property managers are reviewing contracts and having service people in and out of their facilities. This is normal, but what happens when all of a sudden one of those contractors are injured or causes damage to the property? Did your insurance consultant review the service provider’s certificate of insurance and verify the information to be true? Who’s really responsible?
Risk transfer is largely overlooked, but it’s a critical tool to make sure you’re not responsible for someone else’s mistake or injury. Simple wording in an insurance policy can change the outcome of who’s responsible. If risk transfer is properly set up, it places responsibility on the designated party that controls the risk. Liability should be placed on the party that has control of the risk and insurance to back their work.
Having systems in place to monitor risk transfer is a must in the litigious world we live in. It’s a simple step to protect your company and assets. Many organizations have chosen to engage with a chief risk officer or an insurance broker that can manage this, allowing them the opportunity to properly identify the risks your company faces.
Contact a Marsh McLennan Agency (MMA) advisor to learn more about building an effective risk transfer program.