An insurance manager taking extended leave can look like a resourcing issue.
A resignation can look like a recruitment issue.
But for a business with a complex corporate insurance program, both can quickly become a risk management issue.
Insurance responsibilities do not stop because the person responsible for them is away. Claims continue. Contracts are signed. Assets are acquired. Projects commence. Revenue changes. Insurers and brokers ask questions. Renewal dates keep approaching.
The challenge is making sure someone is actively managing those issues while the permanent insurance manager is unavailable.
For a short absence, responsibilities may be absorbed elsewhere in the business. But when an insurance manager is away for several months, whether on parental leave, long service leave or another extended absence, that becomes harder to sustain.
The same applies when a replacement is proving difficult to recruit. In both cases, relying on an informal arrangement can create a significant gap.
And that gap can have financial consequences.
Insurance management is more than administration
The visible tasks may include renewing policies, arranging certificates of currency, responding to broker emails and submitting claims.
But an experienced insurance manager is also continually assessing how changes within the organisation affect its insurance arrangements.
They may be considering:
- whether acquisitions, new locations or major asset changes affect the organisation’s risk profile
- whether revenue, payroll, asset values or other declared information remains accurate
- whether new contracts introduce additional insurance obligations
- whether emerging incidents or claims need to be notified and actively managed
- whether coverage, limits and renewal information remain appropriate as the business changes
That knowledge can make an experienced insurance manager a significant point of dependency within an organisation.
When they leave, even temporarily, the risk is not necessarily that nothing gets done.
It is that the obvious tasks get done while less visible insurance issues are missed.
The cost of an insurance management gap
An insurance management gap can create costs in several ways, particularly when changes to the business are not identified, communicated or reflected in the insurance program.
The financial impact can include uninsured or underinsured losses, claim delays, avoidable premium costs, contractual issues and the opportunity cost of senior employees being pulled away from their core responsibilities to manage specialist insurance matters.
The risk is not simply that something gets missed. It is that the business only discovers the gap when there is a claim, a renewal issue or another event where the insurance program is expected to respond.
A change in the business is not reflected in the insurance program
Businesses rarely stand still for six or twelve months.
A company may acquire another business, open a new location, purchase significant equipment, sell or close an asset, enter a new market, change its operations or sign a major contract.
Some commercial insurance policies place obligations on the insured to notify the insurer of material changes in the nature or circumstances of the risk. Depending on the policy and circumstances, failing to deal appropriately with those changes can affect how the insurance responds.
That is why insurance management needs to be ongoing rather than something that happens once a year at renewal.
A claim or circumstance is not dealt with promptly
Claims management is another area where a gap can become expensive.
Certain policies, particularly claims-made covers, contain important requirements around when claims or circumstances that may give rise to a claim should be notified.
For example, professional indemnity cover can depend on when a claim is made and notified, making timely identification and escalation important.
A finance manager temporarily monitoring an insurance inbox may be perfectly capable of forwarding an obvious property damage claim.
Recognising that a complaint, contractual dispute, employee issue or emerging third-party allegation could potentially develop into an insured claim requires a different level of insurance knowledge.
Renewal becomes a deadline rather than a strategy
Insurance renewal should not simply be a process of obtaining new terms before the existing policies expire.
For larger organisations, renewal may involve reviewing exposures, challenging insured values, assessing claims performance, preparing submissions, considering market conditions, negotiating coverage and deciding how much risk the organisation should retain.
If an insurance manager departs several months before renewal and no experienced replacement is available, much of that strategic work can fall back to the CFO, finance team or broker.
The policies may still be renewed.
The more important question is whether the business has achieved the right result.
Risk Advisory Services has provided temporary insurance support to cover leave or resignations to over 20 companies as well as over 100 outsourced insurance management engagements over the past 19 years.
Why not simply recruit a replacement?
Sometimes that is exactly the right decision.
The difficulty is that finding the right insurance professional can take time.
Insurance managers need an unusual combination of skills. They need enough technical knowledge to understand complex policies and claims, enough commercial understanding to appreciate the organisation’s priorities and enough confidence to challenge brokers, insurers and internal stakeholders when required.
That expertise is becoming increasingly important as the insurance industry faces its own workforce challenges. The Insurance Council of Australia estimates that 30% of the current insurance workforce will reach or exceed retirement age by 2030, while also identifying talent and skills shortages as a significant challenge for the industry.
For businesses recruiting an insurance manager, the practical issue is that the right candidate may not be available when they are needed.
Recruitment pressure can then encourage an organisation to make one of two compromises: leave the position effectively uncovered or rush the permanent appointment.
Interim insurance expertise provides another option, allowing the business to maintain continuity while taking the time to find the right permanent person.
Extended leave creates the same challenge
Not every insurance-management gap begins with a resignation.
Maternity and paternity leave, long service leave and other extended periods of leave can create exactly the same need.
In some respects, planned leave is easier because the organisation has time to prepare.
A structured handover can identify current claims, renewal milestones, major projects, insurer relationships, outstanding actions and areas requiring particular attention.
The temporary insurance manager can then step into an established framework, maintain continuity during the absence and provide a structured handover when the permanent employee returns.
Done properly, the objective is not to replace the employee.
It is to protect the function while they are away.
The limits of internal cover
One of the most common alternatives is to distribute the absent employee’s responsibilities among existing senior staff.
Frequently, that means finance.
There is logic to this. Insurance premiums, claims and financial exposures often mean the CFO already has considerable involvement in the insurance program.
But oversight and day-to-day insurance management are different things.
Asking a CFO or senior finance employee to manage complex insurance matters can create two costs for the business.
The first is the opportunity cost of taking a senior executive away from their core responsibilities.
The second is the risk that specialist insurance decisions are being made without dedicated insurance expertise.
Internal teams bring valuable knowledge of the organisation and its operations. External insurance specialists can add depth of market experience, flexibility and an independent perspective.
Temporary support can therefore maintain continuity without placing specialist insurance responsibilities entirely on people whose primary role sits elsewhere in the business.
Interim does not have to mean junior
This is where businesses should distinguish between temporary staffing and interim specialist support.
The objective is not simply to put somebody in the vacant chair.
For a complex corporate insurance program, the person covering the role needs to be capable of stepping into discussions with the organisation’s executives, broker, insurers and other advisers with sufficient experience to make informed decisions.
Risk Advisory Services has provided insurance specialists to businesses for many years to cover maternity and paternity leave, long service leave and other extended absences, as well as periods where an organisation is recruiting a permanent insurance manager.
The model can be tailored to the actual requirement rather than defaulting to a full-time appointment.
Our engagement model ranges from periodic support through to a full-time resource, with our team bringing an average of 22.5 years’ industry experience.
That means a business can access experienced insurance capability at the level, and for the period, it actually requires.
Build continuity before you need it
The best time to decide how an insurance manager’s responsibilities will be covered is before they become unavailable.
For planned leave, that means identifying the key responsibilities, upcoming deadlines, open claims and areas of institutional knowledge that need to be transferred.
For an unexpected resignation, it means recognising quickly whether the organisation has sufficient internal insurance expertise to manage the gap.
A useful question for executives is:
If our insurance manager was unavailable tomorrow, who would know what needs to happen next?
If there is no clear answer, the organisation may have a key-person risk that deserves attention.
An employee may only be away temporarily.
The risks they manage are not.