How To Manage Risk With An Insurance Policy

FORECASTERS' VIEWPOINT Charles W. Chase, Jr., Editor Forecast Process Manager / Director, Coca-Cola Company HOW TO MANAGE RISK WITH AN INSURANCE POLICY Richard C. Emerson, Principal, RGL Gallagher, CPAs FORECASTERS' VIEWPOINT Charles W. Chase, Jr., Editor Forecast Process Manager / Director, Coca-Cola Company One of the tasks of managing a company is to purchase an adequate amount of business interruption insurance to protect against such things as fire, flood and loss resulting from a machine breakdown. After determining the amount of insurance to carry, the risk manager communicates the information to an insurance carrier. On the basis of this information, the insurance carrier estimates its potential exposure and then arrives at the appropriate premium. Insurance companies are interested in obtaining correct and appropriate valuations so that they can collect the right premium. Some companies may be tempted to report low values or may inadvertently choose a lower level of insurance coverage than the actual value at risk. This means that companies reporting correct values will be paying a higher premium for essentially the same risk. To level the field and encourage accurate ...