Integrated insurance promises more for less effort: to mitigate volaltility in costs and terms, financial executives must overcome an "annual insurance" mindset and adopt a long-term view of risk.

• Author: Summerville, Jeffrey C.
• Position: INSURANCE

CFOs, treasurers and other financial executives are under intense pressure, with less time for insurance buying and more scrutiny of the coverage they carry, especially when insurance terms and costs fluctuate significantly year-to-year. Such volatility is inevitable in insurance programs, right? Not for companies that deploy integrated insurance solutions.

While integrated insurance is not new, it now is muscling its way front and center for financial executives who feel the time is right for a strategic view of risk management.

The integrated insurance concept is simple: a company secures insurance across multiple lines (typically at least three) in a single policy. It can combine traditional coverages and may be able to include lines that are difficult or impossible to secure in the conventional market. A single aggregate limit is applied across the portfolio of risks. The unified coverage extends multiple years--usually three.

According to Doug O'Brien, a senior vice president with Wachovia Insurance Services Inc. in New York, the benefits of the approach are far-reaching. "One major advantage is the time savings that come from bypassing the annual renewal process for multiple lines over multiple years," he says.

And, O'Brien adds, "Integrated insurance clients easily save hundreds of hours--which they can devote instead to areas that have a direct impact on profitability, such as loss control and claims mitigation."

Benefits of Integrated Insurance

Integrated insurance provides a host of benefits. Among them:

* Tailor-made Coverage

Integrated insurance programs enable companies to secure highly customized coverage. Moreover, companies can eliminate the "gray" areas that may lurk between lines of business done the traditional way.

One classic example where boundaries between coverages can be difficult to define is general liability and errors and omissions coverage. There may be gaps in protection that leave a company dangerously exposed. If there are gaps, it may be unclear which policy and carrier should pay a claim, which can make for a contentious claims process.

Integrated insurance sidesteps this problem. In the event of a clash loss across multiple product lines, apportioning of loss is far less of an issue. With all of the coverage provided by one strong carrier, there is less ambiguity.

* Long-term Stability

Integrated insurance programs also offer substantial stability, since coverage terms and pricing are set for a longer...