How to Transfer Risk From Your Organization
by Kelly Reed

How to Transfer Risk From Your Organization

Over the past few weeks I’ve posted about different ways of managing risk within an organization.  The first week was about concepts and strategies around prevention.  Last week the topic was about how to mitigate or minimize a loss after an adverse situation occurs.  This week, I will discuss ways of transferring risk away from your organization.  What do I mean by transferring risk?  How do we take a risk that poses a threat to your company and transfer it to another company, vehicle or entity?

EXAMPLE #1 – A strong certificate management plan.  Insuring that each subcontractor or independent contractor, that your organization uses, has the appropriate insurance limits required by your insurance carrier.  This will ensure that in the event that something was to happen, their policy would respond for them as opposed to coming back or working its way back to you.  This is one way to transfer risk from your company to another company.

EXAMPLE #2 – Concepts revolve around hold harmless agreements or waivers of subrogation.

EXAMPLE #3 – When someone signs up for a fitness membership or joins a gym, more often than not, they are asked to sign a waiver.  This waiver is to get the new member to transfer the risk away from the facility back to them personally.

EXAMPLE #4 – When larger hospitals or health systems employ specialty physicians, often times instead of bringing them into their self insured plans where they may have a $2M, $5M, $10M or $15M self insured retention, they will go to the commercial market and purchase a policy on those individuals and only retain the vicarious liability within their captive or self insured trust or whatever alternative risk vehicle they may have.  The reason they do this is because for the most part, the commercial market is depressed and the cost of that insurance is at some of the all-time lows.  This is just another concept of how to transfer risk from your entity to another party.

There are many ways to transfer risk from your organization.  These are just a few concepts.  Over the next couple of weeks I will discuss the assumption and transferring of risk.  To learn more contact Kelly Reed  |  906.315.7227  |

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