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Insuring Collateral Damages Why Claim Payments Are Less Than Total Losses And What You Can Do About It Bruce B. Thomas

REBEX – September 21, 2010. Insuring Collateral Damages Why Claim Payments Are Less Than Total Losses And What You Can Do About It Bruce B. Thomas. Insurance Is Great. But It Doesn’t Cover The Total Loss . American Spirit Company. A. A. M. M. W. W. American Spirit Company

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Insuring Collateral Damages Why Claim Payments Are Less Than Total Losses And What You Can Do About It Bruce B. Thomas

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  1. REBEX – September 21, 2010 Insuring Collateral DamagesWhy Claim Payments Are Less Than Total LossesAnd What You Can Do About ItBruce B. Thomas

  2. Insurance Is Great Making insurance work even better. Transurance Services, LLC

  3. But It Doesn’t Cover The Total Loss American Spirit Company A A M M W W American Spirit Company Property / Boiler & Machinery Insurance Program May 30, 2010 – May 30, 2011 Page 1 Making insurance work even better. Transurance Services, LLC 6/9/2014 3

  4. Property Loss Survey • Transurance Services surveyed property claim experts to better understand large property claims • 461 years of claim experience resolving more than 2,300 large property claims • Claims settled for more than $10 million and involved BI and EE • Included representatives from: • Insurance companies • Large insurance brokers • Independent adjusters • CPAs and attorneys who specialize in helping companies resolve large property claims Making insurance work even better. Transurance Services, LLC 6/9/2014 4

  5. Key Findings • Resolving large property claims has become more difficult • More people involved, less authority, longer and costlier process, and many reasons for claim disputes, even after all the facts are known • Insurance covers much less of the total loss than previously realized • 15% to 30% of final claimed amounts are not paid by insurance • Final claimed amount does not include damages that: • Are not known, such as increased costs and lost profits • Are known but which are obviously not covered • Fall within deductibles, self-insured retentions, and co-insurance • Exceed policy limits Making insurance work even better. Transurance Services, LLC 6/9/2014 5

  6. Collateral Damages Are Significant • Damages that occur in conjunction with insured losses but which are not paid for by insurance are a large uncovered risk for every insured • They are typically 30% to 50% of insurance recoveries • If an insured receives $10MM from traditional insurance, it will need $3 million to $5 million more to pay for Collateral Damages Making insurance work even better. Transurance Services, LLC 6/9/2014 6

  7. Sources of Collateral Damage • 15% to 30% of claimed amounts are not covered • Many business continuity expenses are uninsurable because they are difficult to define, measure, or prove • Include advertising expenditures; concessions to vendors, distributors, and employees; legal and consulting expenses; additional administrative and financing cost; lost revenues; cost of new risk management programs; regulatory costs; rebuilding to a different standard, etc. • Deductibles, SIRs, amounts in excess of limits, and coinsurance Making insurance work even better. Transurance Services, LLC 6/9/2014 7

  8. Insuring Collateral Damages • Traditional insurance can’t cover them • Requires definition, measurement and proof • Adding more descriptive words to the policy or fighting claims harder will not solve this problem • Transurance can insure Collateral Damages • Simply and efficiently Making insurance work even better. Transurance Services, LLC 6/9/2014 8

  9. Commercial Property Transurance1 • Pays for damages that are collateral to insured losses but not paid for by property insurance • Payout is a pre-selected % of the traditional insurance payment • Collateral Damages do not need to be “proved” • Insured must demonstrate that payment was made under the referenced insurance contract • Proceeds may be used as the policyholder sees fit • Premium is the payout % times the referenced insurance premium 1. Patent Pending Making insurance work even better. Transurance Services, LLC 6/9/2014 9

  10. $ 100,000 Transurance Insurance $ 100 Making insurance work even better. Transurance Services, LLC 6/9/2014 10

  11. Summary • Traditional insurance is very valuable • But can’t cover damages that are hard to define, measure or prove • Collateral Damages are 30% to 50% of property insurance recoveries • Transurance helps pay for this short-fall • No hassle buying this coverage or settling claims • Same value as traditional insurance it references • Provides money to be used at the discretion of the insured • Everyone is sensitized to Collateral Damage after a loss • Why be second-guessed when you can be prepared? Making insurance work even better. Transurance Services, LLC 6/9/2014 11

  12. Cover More With Transurance American Spirit Company American Spirit Company A A A A M M M M W W W W American Spirit Company Property / Boiler & Machinery Insurance Program May 30, 2010 – May 30, 2011 American Spirit Company Property Transurance Insurance Program May 30, 2010 – May 30, 2011 Page 1 Page 1 Making insurance work even better. Transurance Services, LLC 6/9/2014 12

  13. TransuranceServices.com • Information on: • Collateral Damages • Using Transurance to maximize the value of your insurance program • For property, casualty, D&O, E&O, captives, and more Making insurance work even better. Transurance Services, LLC 6/9/2014 13

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