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Risk Transfer - PowerPoint PPT Presentation


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Risk Transfer. Contracts. Why Execute a Contract?. Gives more “ownership” to entity performing the service Sets the terms and conditions of collaboration Protect Cornell assets Allows you to transfer the risk to the party responsible for exposure. Contract Risk Review.

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Presentation Transcript
risk transfer

Risk Transfer

Contracts

why execute a contract
Why Execute a Contract?
  • Gives more “ownership” to entity performing the service
  • Sets the terms and conditions of collaboration
  • Protect Cornell assets
  • Allows you to transfer the risk to the party responsible for exposure.
contract risk review
Contract Risk Review
  • Identification of the risk that the contractor is assuming in the contract.
  • Identification of the risks that Cornell is assuming in the contract.
  • Evaluation of the appropriateness of the risk assumptions.
contract risk review4
Contract Risk Review
  • Evaluation of Cornell’s risk management techniques for those risks that we are assuming.
  • Evaluation of the contractor risk management techniques for those risks that the they are assuming.
  • Evaluation of the insurance and indemnification sections of the contract.
contract risk review5
Contract Risk review
  • Review of your contractor's insurance coverage and collection of certificates of insurance.
  • Quantification of the risk to each organization.
  • Communication of the outcome.
guidelines for contracts
Guidelines for Contracts
  • No Contract-No work.
  • Know the terms and conditions of the contract and follow them.
  • The "liability and risk" should follow "the responsibility" and "the activity" being performed.
guidelines continued
Guidelines Continued
  • Always conduct a pre-contract review, pre-screening of contractors, and a contract risk review.
  • Never execute an agreement unless you have the transaction authority to do so.
  • When choosing a contractor, make sure you evaluate all contractors using the same criteria.
slide8

High Risk

Transaction

A

V

O

I

D

R

I

S

K

Organization assumes

the risk of contractor

Unacceptable

Transactions

No insurance, no

transfer of risk

Gray

area

Full indemnification

by contractor with

questionable ability

to pay claim

C

O

N

T

R

O

L

R

I

S

K

Full indemnification

by contractor with

resources to pay claim

Contractor has Ins.

Cornell gets

additional named

insured status

Preferred

Transactions

Cornell's Risk,

Cornell has Ins.

Low Risk

High Risk

Activity

cautions
Cautions
  • Uneven bargaining power.
  • Faulty risk review or no risk review done.
  • Lack of organizational teamwork.
what s in a name
What’s in a Name?
  • Indemnification
  • Hold Harmless
  • Release
good better best great job
Good, Better, Best, Great Job!
  • Sole Negligence
  • Negligence
  • Acts, errors or omissions
  • Arising out of or in any way related to
so you want insurance
So You Want Insurance
  • What types of insurance should I ask for?
  • What limits should be required?
  • What proof of coverage do I need?
  • What this I hear about status?
  • What should I do about their property?
  • What about my property?
property coverage
Property Coverage

FY 2005-06

Coverage: $2.6 Billion

FM Global

Insurance Company

Coverage: $500,000

Maximum Self Retention

liability basics
Liability Basics
  • Occurrence vs. Claim’s Made
  • Aggregate limits
  • Additional insured, additional named insured, or certificate holder
contractor insurance requirements
Contractor Insurance Requirements
  • General Liability-$1,000,000
  • Auto- $1,000,000
  • Workers Compensation- Statutory Limits
high risk activities
High risk activities
  • Comprehensive General Liability- $5,000,000.
  • Bus travel- $5,000,000
  • Use of Aircraft- $5,000,000 minimum
problems
Problems
  • Certificate of Insurance
  • Copy of Policy
  • Special Exposures
  • Requirement to insure risks not covered.
  • Self Insurance
  • Waiver of subrogation
problems19
Problems
  • Separate limits
  • Primary Insurance requirement
  • Deductible provisions
  • Special, incidental or consequential damages
  • Patent issues
  • Cross liability
problems20
Problems
  • Insurance company size
  • Insurance company quality
  • Licensed to do business
  • Professional liability requirements
  • Faulty risk transfer-Government partners
contractor examples
Contractor Examples
  • HGH lawsuits
  • The disappearance
  • Springtime temperatures of 300 below zero