High Operational Risk = High Insurance Premiums

In its latest Sigma study, titled “Insuring Ever-Evolving Commercial Risks,” overall, premiums for companies across nine industries in 2014 for liability coverage averaged $1.75 per every $1,000 in revenue. That was more than any other commercial coverage!

The Breakdown

• The Services industry spent the most on liability $4.15 spent on premiums per every $1000 in revenue.
• The transportation, communications and utilities industries placed behind the services industry, spending $3.79 of every $1,000 in revenue on liability-insurance premiums
• Worker’s compensation was the second-most-purchased commercial-insurance coverage, with the construction and services industries showing the most demand.

But what is the Actual Reason of paying such High Premium Rates? 

It’s the ever increasing regulations and high risks to which they are subject to. Both large and mid-sized corporations spent most of their insurance premiums on liability insurance. And what’s coming are steep fines, penalties and reputational damages due to ever changing regulatory scenario and evolving risks. For example, according to the 2015 NetDiligence Cyber Claims Study, the average cyber-related insurance claim amounted to $673,767 ($4.8 million for a large company and $1.3 million per claim in the healthcare sector). It was also reported that Fiat Chrysler had to pay $70 M in fines on safety reporting lapses with supply chain being another great risk area.

What is the companies’ best defense against high risk and insurance premiums? 

Most of the companies have paper based processes, risk assessments are done on excel or paper and managed on antiquated systems. You can transform your risk management preparedness and response strategy by automating your enterprise risk, compliance management through a software which will drastically reduce your insurance premiums and increase operational excellence.

If you want to implement a cloud based risk and compliance management software to provide regulatory insight, predict risk, drive operational excellence and reduce insurance premiums, reach out to us for a complementary demo and risk assessment.

 

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