Creating a Corporate Insurance Portfolio

Doing business in the modern world means managing risks. From the risk of the company making a mistake and causing a client to lose money, or the risk of an employee falling over and hurting themselves in the office, even the most mundane aspects of company operations carry a degree of uncertainty.

Between an office suffering a burglary or break in, to physical signage falling an injuring a passerby, there is a lot that can go wrong and end up costing a company money.

Understanding Corporate Risk Management

Insulating yourself from the biggest risks is going to be critical for any successful business, but depending on the industry your company is operating in; your risk management needs may be very different from other businesses. The first step in creating a comprehensive corporate insurance portfolio is understanding what products are mandatory, what coverage you should have, and how any potential policy is going to help your company.

The next step is then going to be building a set of coverages that work for your corporate needs, and those of your employees and customers. A Law Firm, for example, is probably not going to require Commercial Goods Liability Protection, while a Toy Manufacturer may not need Professional Indemnity Protection. Businesses have different needs, and different risks, so one-size-fits-all solutions may not be appropriate.

The final part of creating a Corporate Insurance Portfolio comes down to the management of your insurance. Your company is likely going to change from year to year – new employees will be hired, revenue figures will have increased or decreased from previous years, you may have diversified and are now doing business in new areas. All of these things should be considerations in an annual review of your risk management toolset, and your insurance should be modified if it is not meeting the needs of these new risks.

Step 1: Purchasing Mandatory Business Insurance

Under Hong Kong Law, the Employees’ Compensation Ordinance Chapter 282, an employer must be in possession of a valid insurance policy to cover his liabilities both under the Employees' Compensation Ordinance and at common law for the work injuries for his employees. Failure to hold a valid Employees’ Compensation Insurance policy can mean both a financial penalty and a jail term. This means that any business or company in Hong Kong, employing any person to perform any job, must hold an Employees’ Compensation Insurance policy to cover their liability towards the employee suffering an injury in the routine course of their employment.

Employees’ Compensation Insurance, also known as Worker’s Compensation Insurance elsewhere in the world, is the only universally required form of insurance for all businesses in Hong Kong. If there is an employee of the company, then the company must have EC insurance protection. There may be instances where specific insurance is required for a company to operate inside a certain industry, and all companies in that industry will hold that type of insurance, but every single company in Hong Kong must have employees’ compensation coverage.

But, as already stated, depending on your business and industry there may be additional insurance coverages that a regulator has required you to purchase because of the nature of your work. For example, all Insurance Brokers in Hong Kong are required by the Hong Kong Insurance Authority to hold Professional Indemnity Insurance protection. Additionally, any business that is selling on an e-commerce platform, like Amazon or E-bay, is required to have Commercial Goods Liability Insurance. It is important to identify any industry specific requirements that your company may have, but which may not exist universally for all businesses.

Step 2: Building Your Business Insurance Protection

Once you have identified the mandatory covers that your company is required to take, either through law, regulation, or contractual obligation, it is then time to understand what gaps exist in that coverage – and close those holes through the purchase of supplemental insurance.

While Employee Compensation Insurance will protect your liability towards workers injuring themselves, it will not protect you against your financial responsibility should a customer or member of the general public suffer an injury while on your premises. As such, it may be wise to add Public Liability Insurance to your protection.

If you are giving advice, or you are advising clients and customers on what to do, then your company could benefit from Errors and Omissions insurance protecting you from the outcomes of mistakes made by your staff. Further to this, it could be wise to consider Directors and Officers Insurance to cover against the mistakes of your senior staff in their capacity as business managers. Or even Keyman Insurance to ensure continuity in the event that a critical employee should unexpectedly die.

There are many different types of corporate insurance available around the world, and not every policy is going to be suitable for all companies. Working to understand where your key risks lie will help you to assemble the most robust coverage possible – while staying on budget. For example, if your company is making ceramics, and selling the final product directly to wholesalers, then that company may not need Cyber Insurance as it does not rely on the internet for its business. For an e-commerce website selling those ceramics to the general public via a self-owned website, overlooking cyber insurance could be a serious mistake.

However, it is critical to note that there is no “right answer.” The best coverage solutions for your business are going to be the ones that directly address the risks you are facing.

Step 3: Ongoing Business Insurance Management

One of the biggest components to successfully creating a Corporate Insurance Portfolio is the management of your insurance policies.

Your company is going to change and evolve year-on-year, and if you aren’t paying attention to your insurance with an annual review, or asking an insurance broker to benchmark your existing coverage, then you risk being exposed in the event of a claim. For the simple reason that the policy you purchased years ago has not kept up with developments at your organization. For example, failing to keep up your Employees’ Compensation Insurance in line with the growth in headcount at your company means that you will actually be in violation of local law, and may receive a penalty.

It is not enough to simply purchase insurance; reviews must be conducted to assess whether the insurance is doing its job, and whether any new risks must be considered. A perfect example of this is the emergence of AI technology that is currently being implemented by companies around the world, but which may not be covered for losses the AI tool causes under existing corporate insurance solutions.

CCW Global is able to provide expert assistance and annual reviews to all our corporate insurance clients to assist with this yearly headache. We work with your key stakeholders to ensure that your insurance is doing what it was setup to do, and that no new risks have emerged that could put you in jeopardy.

Free Corporate Insurance Consultations

If you would like to learn more about any of the mandatory or optional Corporate Insurance products available in Hong Kong, or if you would like to arrange a free consultation with an expert insurance broker, please Contact Us today.

Working with more than 60 leading underwriters, CCW Global has more than a decade in assisting corporate customers secure their risks both in Hong Kong and around the world.

Ask CCW about your insurance today: Swift, Simple, Sorted.