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 This is the dimension of the imagination Rod Serling called The Twilight Zone – A dimension we call – The In PowerPoint Presentation
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 This is the dimension of the imagination Rod Serling called The Twilight Zone – A dimension we call – The In - PowerPoint PPT Presentation


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In this session we explore another dimension beyond what is known to the common broker.  . It is a dimension as vast as your customer contract and as timeless as an uncovered claim. .

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Presentation Transcript
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In this session we explore another dimension beyond what is known to the common broker.  

It is a dimension as vast as your customer contract and as timeless as an uncovered claim.

It is the middle ground between products and services, between intellectual property and warranties, and it lies between the pit of the risk manager's worst fears and the summit of an underwriter's combined ratio.  

 This is the dimension of the imagination Rod Serling called The Twilight Zone–

A dimension we call –

The Intersection of Risk.

slide2

Jose Heftye, Flextronics

Jenny Novoa , Gap

Sarah Stephens, Aon

Your Moderator: Alex Tokar, Aon

slide3

Scene 1: The Supplier’s Big Headache

Scene 2: The Brand’s Big Risk

Scene 3: A New Dimension of Possibilities

slide5
Contract Demands:

£50,000,000 Errors & Omissions

£50,000,000 Intellectual Property Liability

Deductible no greater than…

Conflicts & Resolution:

Third party Intellectual Property Liability does not exist

Possible utilization of a captive to address future situations

The “Guest Star” of this scene: Redesign of a smart meter

slide6
Contract Demands:

€40,000,000 Product Liability

€40,000,000 Product Recall

€40,000,000 Product Warranty

€40,000,000 Errors & Omissions

Conflicts & Resolution:

Client wanted dedicated limits per the contract

Utilized existing program with side agreement to reinstate limits if capacity was eroded

Self-insured product warranty and able to get client to accept lower recall limits

The “Guest Star” of this scene: Bluetooth automotive manufacturing

slide7
Contract Demands:

$20,000,000 Products Liability

$20,000,000 Product Recall

$20,000,000 Consequential Damages

$20,000,000 Brand Reputation

Conflicts & Resolution:

Thus far Impossible to comply with client’s demand for brand reputation.

Product Liability & Recall partly evidenced with existing programs.

Consequential damages agreed, but self-insured.

The “Guest Star” of this scene: Electronic Retail Products

slide9
Contract Requirement:

Software companies must have E&O and Privacy insurance.

Access to our customer data and/or systems could expose large losses.

Complaint & Resolution:

Vendors claims E&O/privacy are too expensive or limits too high.

Evaluate the risk to the company.

In certain case we accept the risk and waive E&O.

The “Guest Star” of this scene: Software Vendors

slide10

The “Guest Star” of this scene: Co-development deals

Complaint & Resolution:

  • Make sure the business has a defined scope of work. 
  • We may back off of high limit requests based on the business partner.

Contract Requirement:

  • No one wants to accept any risk!  
  • Who owns the IP?
  • Who caused the problem?
slide11
Contract Requirement:

Big exposures for the company – data, technology, infrastructure

We want substantial E&O, GL, property, and privacy limits.

Complaint & Resolution:

Significant pushback during contract negotiation

Risks too big to ignore. Held our ground for higher limits.

The “Guest Star” of this scene: Outsourced IT & Data Centers

slide12
Contract Requirements:

Products for infants and children create unique risks

Require higher product liability limits and recall insurance

Complaint & Resolution:

Overseas vendors often claim insurance is unavailable or they don’t wish to purchase

We take a tough stance on this one

The “Guest Star” of this scene: High Risk Products

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The “E&O UFO”

InfoSec

Intellectual Property

Infringement

Professional Liability

Media Liability

Technology Professional

Crisis Management

Content Liability

Security/Privacy

Liability

Professional Indemnity

Cyber Liability

Identity Theft Liability

Data Breach Expense

Network Risk

Healthcare Risks

Identity Theft Insurance

Medical Malpractice

Data Breach

Insurance

Third Party Recall

Architects & Engineers

Internet Media

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Client Quandary:

Your client requests to be added as an “additional named insured” or an “additional insured” on your E&O policy

Policy Solution:

Additional insured status:

Makes no sense &/or not available

Alternatives may better meet their goals

The “Guest Star” of this scene: E&O Requirement on Services Contract

slide16
Client Quandary:

Handset manufacturer requires that you accept $50MM in liability for failures of your chip as well as any resultant recall costs they incur

You don’t purchase any type of recall policy

Policy Solution:

E&O coverage for your technology services and products, with an additional coverage grant for third party recall costs

The “Guest Star” of this scene: Handset Manufacturers Conundrum

slide17
Client Quandary:

A public entity requires evidence of Cyber Insurance in a contract where you will implement a new online system for residents to pay taxes, citations, and licensing fees

Policy Solution:

You carry E&O insurance, but “Cyber” is not an industry standard term. Be aware of indemnification obligations for data breach expenses - will your policy pay?

The “Guest Star” of this scene: The Cyber Requirement

slide18
Client Quandary:

You (the retailer) are hiring a vendor to implement a data-intensive new loyalty program

The program will integrate the existing CRM system with mobile devices and a new social media campaign

At least 4 vendors will be involved directly or as subcontractors

What new risks do we face?

Your insurance

Vendor insurance

Contractual risk transfer

Vendor risk assessment

(financial, technical, legal, security, privacy,

quality control, compliance)

And Now The Tables Have Turned !

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The End or Is It...?

Jose Heftye

Senior Director, Risk Management

Flextronics, Inc.

847 Gibraltar Dr Bldg 5

Milpitas, CA 95035

jose.heftye@flextronics.com

(408) 576-3726

Sarah Stephens

Vice President

Aon Risk Solutions 

Professional Risk Solutions

199 Fremont, Suite 1500

San Francisco, CA 94158

sarah.stephens@aon.com

(415)486-7438

Jenny Novoa

Senior Director of Risk Management & Safety

Gap Inc.Two Folsom Street

San Francisco, CA 94105

Jenny_novoa@gap.com(415) 427-3306

Alex Tokar 

Managing DirectorAon Risk Solutions199 Fremont Street 

San Francisco, CA 94105alex.tokar@aon.com

(415)486-7377