HM has experience working with companies that have filed or are about to file for either Chapter 7 (to be liquidated and go out of business) or Chapter 11 (to be reorganized and continued) protection, and their respective insurers. We apply the same basic principles of Enterprise Risk Management to very unique and unusual circumstances with regard to client-insurer relations. Although they cannot be forced to renew a policy for a bankrupt client, insurance companies may not cancel insureds that are under bankruptcy protection. However, insurers remain entitled to fair and reasonable premiums commensurate with the risks they insure, as their obligations to pay insured claims are not affected by either type of bankruptcy filing.
For our clients and prospects that have filed for bankruptcy protection, HM analyzes all potential future liabilities associated with Workers Compensation, General & Product (including Recall) Liability, Environmental Liability, Directors & Officers Liability, Fiduciary Liability, Employment Practices Liability, Professional Liability and any other potential future liability. These liabilities are divided into those that are estimated will arise from prior acts (pre-petition or before the date of filing) and those that are estimated will arise from ongoing operations (post-petition). The latter is obviously much more controllable and HM will work with our clients to mitigate, and possibly avoid, these future liabilities.
As with all our clients, HM pays close attention to the preservation, improvement and coordination of the ongoing Insurance and Risk Management programs, including Claim Administration, Safety and Loss Prevention, of our clients that have filed for bankruptcy. We also assist in ensuring reasonable amounts and forms of collateral are kept in place to secure various retained losses.
In the event a carrier or program warrants replacement, HM is prepared to thoroughly review and summarize our clients’ various exposures to risk and design, solicit, negotiate, analyze and place the respective alternatives with the appropriate market.