OOPS, MY BAD. THE MOUNTING CASE FOR PROFESSIONAL INDEMNITY INSURANCE IN A GLOBAL ECONOMY.

 The Basics

Professional Liability insurance, also known as Professional Indemnity insurance, is designed to provide coverage for damages awarded as a result of the policyholder's liability, arising out of a claim for an error, omission, or negligence in the performance of services under contract and/or the delivery of professional, 'expert' advice or counsel. Typically such policies offset the cost of legal defense and will fund settlements between counter-parties prior to a legal judgement being rendered.

Professional liability insurance is a business imperative for professionals with a specific expertise. General Liability Insurance policies do not provide coverage in respect of claims arising out of business operations or professional practices; which is to say legal action arising out of the rendering or failing to render services under contract (e.g. negligence, malpractice or misrepresentation).

A New World Order

The notion of 'expertise' has morphed considerably in the past thirty or so years. Historically, professional liability coverage was immediately associated with a traditional interpretation of 'profession', and addressed occupations such as medicine, dentistry, law, architecture and engineering.

However, the diversification of economies and the emergence of the consulting sector meant that more people were trading in ever increasingly distinct areas of subject matter expertise. The butcher, baker and candlestick maker have evolved into the Ergonomic Specialist, the Software User-Experience Evangelist, and the Alternative Biofuels Technician.

Meanwhile, globalization leads to a further and exponential proliferation of the need for professional indemnity coverage as experts in one region begin to act on the advice and counsel of others with respect to different practices in other regions. Relocation and Destination Services are a prime case in point.

Compellingly, in the ethereal cyberspace environment, even companies that are convinced they do not face professional liability risks per se, may in fact be exposed through outsourcing, online commerce, privacy/data breach, and intellectual property issues.

Internal Conflict Resolution

Having confidence in a responsive professional indemnity program in partnership with solvent and reputable providers is not only an empowering means of guarding against the self-preserving knee jerk reactions that can destroy market reputations and valued relationships, but it might just also serve to improve them.

For privately held, small to medium enterprise, the prospect of an honest mistake bringing an organization to the financial brink is unbearable.

We all like to imagine that everyone aspires to unblemished integrity and unwavering character in every circumstance. Truth be told, amid the initial horror of realizing your company's reputation is on the line, this can be a struggle. Doing the right thing, facing the music, swallowing pride and taking bitter medicine can, for some mortals, be difficult in the eye of the storm. It takes no small amount of effort to banish tantalizing notions of denial and escape to the dark recesses of one's mind.

A well-worn and enduring business axiom familiar to many asserts that effectively remedying a customer service issue or complaint, in the end, engenders better client relations than those that would have prevailed had the service issue not transpired in the first place.

Misadventure Capital

Through working alongside student interns, mentoring recent graduates and following youth-focused entrepreneurial initiatives, a recurring pattern has become evident: the imperative and awkward transition from a world where young people are challenged to prove their intelligence to one where they are dared to prove their worth.

There is a striking parallel in our field, being as it is in full adolescent bloom.

In recent years the international relocation and global mobility industry has been inundated with a veritable pot pourri of certifiers, qualifiers, endorsers, and licensers. In other more mature sectors of the economy these erstwhile diplomas are invariably linked and associated with the financial backing of a solvent third party in the form of compulsory professional liability/errors and omissions insurance. These pairings effectively put money behind brainpower, while raising the standards of and professionalizing a given sector. Be it in the context of programs for groups or individuals, the bottom line is that in genuinely professionalized industries, you don't get the shiny certificate if you don't have the coverage to back it up.

There is no doubt a traceable correlation between education, operational controls, systems auditing, quality assurance and a decreased likelihood of something going wrong at the expense of a third party. However no amount of automation or process engineering will eliminate oversights and slip-ups.

Mistakes do happen, albeit less frequently in conscientiously managed organizations, but they happen. For that very reason, professional liability insurance exists.

Ante Up.

There is also a purely commercial element.

Casting aside all the arguments and evidence supporting the maintenance of professional liability cover as conscientious and prudent risk management practice, there still remains the fact that for good risk management reasons, multinational corporates and relocation management companies demand that vendors and suppliers maintain such policies.

Ergo, you may choose to come to accept professional liability insurance premiums as table stakes, paying whatever ante is required to play in the big leagues.

Household Goods Insurance
WERC Chicago 2014
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