An article I just read suggests to me that insurance policies should be read very carefully before signing on the bottom line.
The article, at http://tinyurl.com/2b6kgg2, describes a sex discrimination suit against a school board.
Briefly, the plaintiffs threatened to go to court. The district's insurer apparently - the article lacked details - made a deal with the plaintiffs' attorney without consulting the board; the school board rejected the settlement. A judge ordered the school board to settle.
Now the interesting part.
Of the total settlement, the insurance company paid less than 30 percent of the award. The board also had to pay a $10,000 deductable toward the insurance company's lawyer fees; the deductable equates to a little less than 10 percent of the lawyers' bill.
The school district - that means its taxpayers - wound up paying more than 70% of the award despite having insurance.
Beside the fact that, to my mind at least, it is questionable for a third party (the insurer) to make an agreement sans permission from defendant (the insured), this article tells me that as an ERM practitioner, I need to encourage my clients to carefully examine their insurance coverage and the insurer's conditions.
I'm confident that the insurer acted according to its contract with the school district, but I might have a problem with whomever accepted the contract on behalf of the school district.
Insurance is one of the many ways available to mitigate or transfer risks. Most organizations have multiple policies. Insurance often is a big part of an organization's survival plans. It seems appropriate, then, that policies are scrutinized before the contract is inked and that the documents are reviewed regularly to assure the coverage still meets the organization's requirements.
ERM practitioners need not be insurance experts, but practitioners are remiss if they fail to at least encourage their clients to know and understand the coverages.
Enterprise Risk Management practitioner
Hollywood - Fort Lauderdale Florida