Crisis covered: Coping with the new normal

It has been more than 50 years since Robert F. Kennedy uttered the words, Like it or not,we live in interesting times, but it holds true now more than ever.

Organizations are thriving in a world dubbed as the new normal, full of previously unfamiliar situations that have now become standard, usual, or expected. Businesses in various industries face what used to be an atypical environment, where a claim can result in a negative impact to their bottom line.

As if thats not difficult enough, companies also have to fight to make sure the brand and reputation they have built for years will not be ruined by any unfortunate incident. This is especially true now when widespread adverse publicity associated with an accident can quickly spiral out of control due to social media and the 24-hour news cycle.

Michael Kirchgessner, Vice President, Umbrella & Excess underwriting at CNA, said their claims experts have seen many instances of insureds not reacting to or recognizing the potential catastrophic outcome of a situation when it occurs. Many insureds have not experienced a catastrophic liability claim and simply do not expect a claim to get to the point of being a crisis a catastrophe to the business or they think they can handle it once it happens, he said. But once it happens, it could be too late to get out in front of a situation.

Take the case of a distributor of a manufacturing product who was responsible for warranting the quality control process of a product it distributed to a major box store retailer and manufactured by a separate entity. Unbeknownst to the distributor, the product manufacturer changed the formula of the product which resulted in substantial bodily injury to consumers. The manufacturer, the insured distributor, and the box store retailer all face exposure.

Demands are in the tens of millions of dollars. The manufacturer only has $10 million in product liability insurance. The box store retailer is an additional insured under the distributors policy. In this situation with multiple claimants and exposure well in excess of the manufacturers policy, it is extremely important that the matter is handled properly due to adverse media publicity, potential devastating impact to the insureds finances, as well as making sure the insured retains an important business relationship with the box store retailer.

This is just one scenario in which a business whether in the industry of construction, financial institutions, healthcare, hospitality, retail, manufacturing, real estate or technology can face catastrophic losses.

Fortunately, organizations do not have to face the unexpected alone. There are now options available to help them prepare for and address any scenario. Businesses can count on umbrella policy & excess insurance coverage, which can include services to mitigate losses.

To highlight the advantages of getting umbrella & excess coverage, CNA and Advisen released a white paper detailing how this type of insurance keeps liability claims from reaching crisis levels. The paper underscores that in terms of crisis management expense coverage, getting an umbrella insurance policy and excess coverage is like getting the right kind of prompt, empathetic response that can keep catastrophic loss from happening. As the white paper states, it may not be a question of if your business is struck by a potentially catastrophic liability claim, but whether you have the peace of mind in knowing you have the right level and kind of insurance coverage, and a team of professionals to ensure you maintain your business continuity.