Insurance
A significant portion of our consulting practice is in the area of corporate insurance. We believe the knowledge and experience of our key personnel in corporate risk and insurance management are second to none. We keep on top of changes in the scope of policy wordings, the law as it pertains to insurance, and the prevailing insurance market conditions and rating in Canada, the US, and internationally.
Insurance Audit
An insurance audit provides a detailed grassroots analysis of the corporate insurance program and the scope, amount, and quality of coverage of insurable operational risks. Will the insurance respond to the full range of operational risk exposures? Are the limits adequate for worst-case loss? Are the various policies integrated in a seamless manner? Are there any exclusions, warranties, or other terms that could potentially threaten full indemnity? Are deductibles and self-insurance arrangements optimized? Are premiums and broker fees reasonable? Are there opportunities for improving Value-For-Money?
A line-by-line technical audit of each insurance policy wording examines each exclusion, condition, restriction, basis of loss settlement, and insuring agreement for its potential effect on indemnity following a loss. We evaluate whether all commercially-available coverage extensions have been incorporated where required.
Property and business interruption values are audited for adequacy. Contingent business interruption exposures are identified and assessed. The full range of potential liability risks including E&O, D&O, and cyber liability is assessed. Insurance representations, warranties, and disclosure are reviewed. Insurance rates are evaluated for competitiveness, against both prevailing market rates and benchmarked peer-group rates. Policy documentation, schedules, and invoicing are audited for accuracy and completeness. Broker performance is benchmarked.
In summary, a Sigma Risk insurance audit thoroughly examines every component of corporate insurance management: coverage, cost, quality, and service.
Insurance Purchasing and Tenders
Often, clients ask us to analyze the insurance purchasing process and evaluate its integrity and results: from disclosure, representations, and marketing style to rates, insurer security, and broker services. We ensure our clients obtain a competitive advantage in insurance costs, coverage, and quality, often involving an insurance tender, or more commonly, an insurance brokerage RFP.
We have assisted clients in more than one hundred and fifty corporate insurance competitions using best practice processes. Our reputation is for a smooth, well-prepared, and incident-free tender with quality group consensus and results.
cyber risk & insurance
Over the past ten years, cyber risk has increased, as has the array of cyber insurance products. Sigma Risk consultants have remained on top of these changes, as well as data on breach losses and the changing legal liabilities associated therewith. Cyber risk assignments have included those in the financial institution, health care, municipal, and energy sectors. We have intimate familiarity with available cyber insurance policy forms, as well as the cyber coverage already provided under conventional property, general liability, crime, fidelity, errors and omission liability insurances, and even performance bonds. Our cyber risk assessments skills are excellent.
Insurance Claims
When a corporation has a large insured property or business interruption loss, it faces the challenging process of quantifying, documenting, and proving the insurance claim. From time to time, adjusters and their experts can be demanding, slow, and even occasionally adversarial. Their interpretation and quantification of insured loss costs are generally made with their insurers' interests in mind. Often some aspects of insured loss are either forgotten or unfairly underestimated. As well, an insured corporation often underestimates the time, effort, and complexity of successfully making a large property, business interruption, pollution, machinery breakdown, or extra expense insurance claim. Sigma Risk has the large claims management experience, technical knowledge, and objectivity required to assist with claims assembly and quantification and to obtain fair, expeditious claims settlement. We have calculated, documented, and settled more than sixty large ($10 million - $1 billion) insurance claims. Our fees are generally covered by the professional fees extension in the policy.
lender insurance reviews
On behalf of lenders and investors, we conduct due diligence risk and insurance audits on the borrower's operations, operational risks, and insurance coverage and security. We have worked for all of the major banks in Canada and for banks all over the world (including the World Bank). We go beyond the checklists used by other insurance auditors and look at how the borrower's operations actually fit within the four corners of its insurance policies, particularly in respects of exclusions, warranties, co-insurance, and misrepresentation. We look for black swans.
Enterprise Risk Management
Sigma Risk consultants are experienced in the framework and implementation of all of the various Enterprise Risk Management (ERM) models: COSO, Basel II, ISO 31000, and other variations from governmental agencies.
Sigma Risk has assisted a wide variety of organizations to implement ERM from scratch, from public entities, risk pools and financial institutions, to utilities and international development agencies.
We are experienced facilitators in the range of enterprise risks: strategic, financial, organizational, cyber, operational, reputational, ESG, and market risks of all types. We know how to run an effective facilitated ERM workshop, how to build and populate risk registers, how to develop corporate risk policy, tolerances and metrics, how to frame decision-making on risk mitigation and how to select the key risk indicators necessary for ERM reporting.
Our facilitated risk assessment processes (the foundation of effective ERM) are rather more rigorous than other accounting-based and insurance broker-based ERM practitioners.
Our several dozen ERM projects have all been successful, on time and on budget.
P3 Risk and Insurance Management
We work for both project owners, public or private partners, and, often, their financiers.
The role of bonding and insurance in a Private Public Partnership is of paramount importance to everyone, including the Public Partner and the Lenders. P3’s have risk allocation and cost issues not found in shorter design, construction and maintenance contracts. Getting the right balance between security and cost is vital, because that balance will last for twenty or thirty years.
Sigma Risk has considerable knowledge and experience on P3 risk and insurance. We’ve conducted P3 insurance assignments in transportation, marine, health care and office complex infrastructure. That knowledge extends to both the P3 risk itself, and the available and customary P3 bonding and insurance products and rates in Canada and the US. That allows an objectively evaluation, without status quo or availability bias, of the benefit-cost of each insurance for the specific risks of a P3.
We are also familiar with the various flowthrough, benchmarking and other contingency models in use for allocating and sharing insurance premium risk as between stakeholders
Risk Engineering
Our expertise in the area of risk assessment and insurance is enhanced by the engineering background of our consultants. Sigma Risk is a licensed consulting engineering firm. The majority of our consultants have, inter alia, an engineering background. This background helps us better understand the technical and process nature of our client's business and enables us to perform a complete and accurate risk analysis of all their operational risks.
Valuation
Sigma Risk has developed particular expertise in the valuation of assets and insurable earnings. Our knowledge has been gained by working for a wide range of international and domestic clients. As engineers, we have conducted replacement cost appraisals and economic valuations for insurance purposes on a wide variety of assets, from commercial real estate and manufacturing facilities to power plants, telecom networks, and even offshore oil and gas platforms.
Maximum Foreseeable loss studies
A maximum foreseeable loss study (also called a Maximum Probable Loss study) is often used as a foundation for establishing insurance limits for property business interruption, liability, pollution, crime or cyber insurance. It is often a requirement in P3 agreements. Insurance underwriters are also interested in such studies.
Over the last twenty years, Sigma Risk engineers have completed more than a hundred MPL studies on a wide variety of infrastructure, real estate, transportation and energy projects.
Typically, these MPL assignments include windstorm, earthquake, flood, fire, pollution, collapse and other perils. A Sigma Risk MPL study is technically well considered, well documented, well respected and signed by Sigma Risk engineers.
RISK MODELLING
Risk modelling is an advanced risk assessment technique that was numerical simulation (e.g. Monte Carlo) and is useful for risks whose event probabilities and consequences can be quantified or estimated from engineering and loss data using algorithms. Risks where modelling is often a value-add include catastrophic risks (flood, earthquake, hurricane, ice storm, etc.), general or pollution liability losses, low-frequency events (e.g. nuclear power plant meltdown), or even some types of enterprise risks (notably market and commodity price risk).
We are also experienced in modelling hazardous (flammable or toxic) released and Sigma Risk has built many dozens of these risk models, using conventional modeling software (PHAST, BREEZE, SLAB, DEGADIS, @RISK, MS XL).
Climate Change risk
Climate change becomes a corporate operational risk issue when storm intensity, rainfall, flood, and windstorm risk increase, exposing assets and business continuity. Risk assessment of these potentially insurable risks whilst allowing for climate change, both on a physical and enterprise level, is part of our risk assessment service.
PROject risk management
Several of Sigma Risk's engineers are former project engineers and one is a certified PMI Risk Management Professional (PMI-RMP). We are experienced and confident in applying the PMI risk framework and other project risk management frameworks to projects of all shapes and sizes, be they construction projects, transportation P3’s, IT projects, healthcare, aviation or energy projects.
Interestingly, the prescribed risk management framework and processes of Project Management are the same as for Enterprise Risk Management. We are familiar with life-cycle project risk through our work on dozens of major projects: multi-billion dollar energy developments; office complexes, marine terminals, highways, hospitals, property developments, nuclear energy and other electrical and gas utility projects.
Other Risk Advisory Services
Sigma Risk works with its clients to define and develop all aspects of an effective and cost-efficient risk management program on a corporate level. Our expertise and experience in certain specialized management consulting areas are presented below.
Risk Financing
We are conversant with all of the risk financing products available in the commercial and risk pooling marketplace, including self-insurance funds or reserves, captives, industry captives and risk pooling groups. We have even worked on studies involving financial insurance, finite risk reinsurance, rent-a-captives, alternative risk financing vehicles, and reciprocal insurance exchanges.
Our objective in the risk financing field is to assist clients in selecting, designing and implementing the least cost, most reliable portfolio of risk financing components: self insurance, captives, insurance, reinsurance (treaty, facultative, and stop loss) and chronological loss stabilization techniques.
Group Risk and Insurance Pooling
For groups seeking analysis and advice on group insurance feasibility (be they reciprocal insurance exchanges or group captives), we offer audit or strategic analysis services, either at the feasibility stage or on an ongoing program. We can analyze, advise and assist in the structural, actuarial, legal, and rating aspects of pooling, as well as in reinsurance strategy and pricing.
Our experience includes the feasibility and formation of two reciprocals and eight offshore captive insurance companies.
Mergers and Acquisitions
How to consolidate insurance programs quickly at least cost is a challenge, but one often left for later in an acquisition, thus sacrificing immediate perspective and benefits. We can assist in the due diligence requirements for data collection, risk assessment and claim analysis of a proposed M&A.
Rating and Cost Allocation
Sigma Risk helps its clients in developing workable and defensible allocation of forecast self-insured loss, insurance premiums and other risk costs amongst the business units of an organization or even beyond. Our actuarial skills and knowledge of commercial insurance underwriting practices and rates can provide a defensible, equitable and practical rating, and cost allocation scheme.
Actuarial Analysis
Sigma Risk provides certified actuarial analysis to corporate self-insurance funds, reserves and captives for financial reporting purposes on all property and casualty lines of business including property, general, and pollution liability. The purpose of our analysis is to provide corporate management with reasonable budgeting, actuarial and funding indications for corporate self-insured or captive insurance programs. We also perform captive feasibility studies, cost/benefit analysis of alternate risk retention, and periodic reporting on loss development and other metrics to assist in the identification and management of loss trends.
Decision making & FACILITATION
Several of Sigma Risk's consultants are trained in decision theory and practice. We apply this knowledge to help clients make high-quality decisions under uncertainty. We follow the Stanford decision process of the proper frame, doable alternatives, adequate information, defined values, and rational algorithms, including risk modeling of the risks. We have assisted many of our clients on multi-million dollar investment, financing, self-insurance, and risk mitigation decisions.
Business Continuity
A Business Continuity Plan (a BCP) generally follows an accepted format with generally accepted content. The office, IT and communications aspects are generally straightforward in terms of the business impact analysis, recovery time objectives and resource planning. Where BCPs may increase in complexity is either when catastrophic risks (flood, hurricane and storm) are involved or when production or supply chain components and their replacement time become challenging. We’ve prepared BCPs in the retail, municipal, engineering, construction, energy and financial institution sectors.
Expert Witness
Sigma Risk consultants have acted for counsel in an expert witness capacity on some fourteen occasions in the areas of generally-accepted and prevailing risk and insurance principles and practices, and in insurance policy interpretation at the field level.