Keith Richards’ $1.6MM finger and five questions that might reduce your business insurance premiums

When I saw that The Rolling Stone Keith Richards had his middle finger insured for $1.6MM,I thought that seemed like a lot. That was until I was reminded that the Stones raked in over $100MM from their last tour alone. If Keith’s middle finger drops off, he might as well package it up and sell it on Ebay.

What Keith gets up to with his finger is anyone’s guess and that uncertainty will be priced into his policy. I wonder if he could reduce his premiums by demonstrating that his finger is better looked after than most.

So where am I going with this? Well, your firm is probably insured against all sorts. If the head office falls down, there’s a policy for that. If you get stuck in an ash-cloud, there’s a policy for that. If someone launches a denial-of-service attack on your website and prevents you from trading, that’s a bit more complicated!

Some firms assume they are covered by Business Interruptions Insurance for this type of cyberattack but you must check the policy carefully as there will almost certainly be exclusions. Others might take out a specific cyber liability insurance policy. But like Keith’s finger, it’s a difficult premium to price given the relative immaturity of the market and lack of historical trend data on incidents.

There must be a logic that says resilient firms benefit from lower insurance premiums, especially if they can prove their resilience. I have no data to back this up (yet), but it seems sensible.

So what are the features of your firm that make you resilient?

• Can you identify threats and mitigate them quickly?
• Have you got a handle on your critical assets (technology or otherwise) and are they sufficiently protected?
• Are you organised to respond to a crisis in a way that gives your customers confidence?
• Do you test your continuity plans in a robust manner and does your board know where the weaknesses are in those plans?
• Are your suppliers contributing towards the resilience of your firm?

If the answer is ‘no’ to any of the above, then it’s time to dust off your insurance policies and make sure they offer some kind of protection. Chances are, you’ll be paying over the odds for your premiums. Better still, start to address some of the resilience gaps and then talk to your broker.