INS: Insurance

Document Type

Code: INS
Name: Insurance
Domain: Risk & Governance

Abstract

This specification defines the Insurance document type within the BSpec 1.0 Universal Business Specification Standard. It establishes normative requirements, structured templates, and implementation guidance for organizations documenting insurance within the risk-governance domain. This specification enables systematic, machine-readable documentation that supports strategic planning, operational execution, and organizational alignment.

Purpose and Scope

The Insurance document defines systematic approaches to managing insurance programs that transfer financial risks and protect organizational assets, operations, and stakeholders. It establishes insurance frameworks that optimize risk transfer, minimize total cost of risk, and ensure adequate protection against potential losses.

Document Metadata Schema

---
id: INS-{insurance-area}
title: "Insurance — {Insurance Area or Program}"
type: INS
status: Draft|Review|Approved|Active|Deprecated
version: 1.0.0
owner: Risk-Manager|Insurance-Manager|CFO
stakeholders: [risk-team, finance-team, legal-team, operations-team]
domain: risk-governance
priority: Critical|High|Medium|Low
scope: insurance-management
horizon: tactical
visibility: confidential

depends_on: [RSK-*, FIN-*, LEG-*, OPS-*]
enables: [CTL-*, COM-*, REP-*, AUD-*]

insurance_strategy: Traditional|Captive|Self-insurance|Hybrid
coverage_approach: Comprehensive|Targeted|Layered|Integrated
risk_retention: Low|Moderate|High|Variable
program_complexity: Simple|Moderate|Complex|Sophisticated

success_criteria:
  - "Insurance program effectively transfers appropriate risks"
  - "Insurance coverage optimizes cost and provides adequate protection"
  - "Claims management maximizes recovery and minimizes losses"
  - "Insurance strategy supports business objectives and risk management"

assumptions:
  - "Risk assessments accurately identify insurance needs"
  - "Insurance markets provide adequate coverage options"
  - "Claims procedures are effective and well-managed"

constraints: [Market and regulatory constraints]
standards: [Insurance and risk management standards]
review_cycle: annual
---

Content Structure Template

# Insurance — {Insurance Area or Program}

## Executive Summary
**Purpose:** {Brief description of insurance program scope and objectives}
**Insurance Strategy:** {Traditional|Captive|Self-insurance|Hybrid}
**Coverage Approach:** {Comprehensive|Targeted|Layered|Integrated}
**Risk Retention:** {Low|Moderate|High|Variable}

## Insurance Framework

### Insurance Philosophy
- **Risk Transfer:** {Strategic transfer of appropriate risks to insurance markets}
- **Cost Optimization:** {Optimization of total cost of risk and insurance spend}
- **Protection Focus:** {Comprehensive protection of assets and stakeholders}
- **Value Creation:** {Insurance as tool for business enablement and growth}

### Insurance Strategy
    ```yaml
    insurance_methodology:
      risk_transfer_strategy: {Strategic approach to risk transfer and retention}
      coverage_philosophy: {Insurance coverage philosophy and principles}
      vendor_management: {Insurance carrier and broker management approach}
    
    program_structure:
      program_design: {Insurance program design and architecture}
      coverage_layers: {Insurance coverage layers and coordination}
      retention_strategy: {Risk retention and deductible strategy}
    ```

### Insurance Scope
- **Property Insurance:** {Physical asset protection and property coverage}
- **Liability Insurance:** {Liability protection and third-party claims}
- **Financial Lines:** {Financial and professional liability coverage}
- **Specialty Coverage:** {Specialized coverage for unique business risks}

## Risk Assessment and Coverage Analysis

### Risk Identification and Assessment
    ```yaml
    risk_assessment:
      property_risks:
        - risk: {Property Damage}
          exposure: {Real and personal property exposure assessment}
          valuation: {Property valuation and replacement cost analysis}
          perils: [fire, flood, earthquake, theft, vandalism]
    
        - risk: {Business Interruption}
          exposure: {Revenue and profit loss exposure}
          dependencies: {Critical dependencies and single points of failure}
          recovery_time: {Business recovery time and impact analysis}
    
      liability_risks:
        - risk: {General Liability}
          exposure: {Third-party bodily injury and property damage}
          operations: [premises, products, professional_services]
          limits: {Appropriate liability limits assessment}
    
        - risk: {Professional Liability}
          exposure: {Errors and omissions in professional services}
          scope: [advice, design, services, products]
          industries: {Industry-specific professional risks}
    
      financial_risks:
        directors_officers: {D&O liability exposure and coverage needs}
        employment_practices: {Employment-related liability risks}
        fiduciary_liability: {Employee benefit plan fiduciary exposure}
        cyber_liability: {Cybersecurity and data breach risks}
    ```

### Coverage Gap Analysis
- **Exposure Identification:** {Comprehensive exposure identification and mapping}
- **Coverage Evaluation:** {Current coverage adequacy and gap assessment}
- **Limit Adequacy:** {Coverage limit adequacy and catastrophic exposure}
- **Market Analysis:** {Available coverage options and market conditions}

### Insurance Needs Assessment
    ```yaml
    needs_assessment:
      coverage_priorities:
        critical_coverage: {Mission-critical coverage requiring high limits}
        important_coverage: {Important coverage with moderate limits}
        supplemental_coverage: {Supplemental coverage for specific risks}
    
      financial_analysis:
        maximum_foreseeable_loss: {MFL analysis for major exposures}
        probable_maximum_loss: {PML modeling and scenario analysis}
        retention_capacity: {Financial capacity for risk retention}
        cost_benefit_analysis: {Coverage cost vs benefit analysis}
    
      regulatory_requirements:
        mandatory_coverage: {Required insurance coverage by law or regulation}
        contractual_requirements: {Insurance requirements in contracts}
        industry_standards: {Industry standard coverage requirements}
    ```

## Insurance Program Design

### Program Architecture
    ```yaml
    program_design:
      coverage_structure:
        primary_coverage: {Primary insurance coverage and limits}
        excess_coverage: {Excess and umbrella coverage layers}
        specialty_coverage: {Specialized coverage for unique risks}
    
      program_coordination:
        policy_coordination: {Coordination between multiple policies}
        coverage_integration: {Integration with enterprise risk management}
        claims_coordination: {Claims handling and coordination procedures}
    
      retention_strategy:
        deductible_structure: {Deductible levels and risk retention strategy}
        self_insured_retention: {Self-insured retention and captive programs}
        risk_sharing: {Risk sharing arrangements and participation}
    ```

### Coverage Types and Specifications
- **Commercial General Liability:** {CGL coverage scope, limits, and exclusions}
- **Property Coverage:** {Property insurance including equipment breakdown}
- **Workers' Compensation:** {Workers' comp coverage and safety programs}
- **Cyber Liability:** {Cyber insurance for data breaches and attacks}

### Policy Terms and Conditions
    ```yaml
    policy_management:
      policy_terms:
        coverage_scope: {Clear definition of covered risks and perils}
        exclusions: {Understanding and management of policy exclusions}
        conditions: {Policy conditions and compliance requirements}
        definitions: {Key policy definitions and interpretations}
    
      limit_management:
        limit_adequacy: {Regular assessment of coverage limit adequacy}
        aggregate_limits: {Management of aggregate limits and reinstatement}
        sublimits: {Sublimit management for specific coverage areas}
    
      endorsements:
        coverage_enhancements: {Endorsements to enhance coverage}
        risk_modifications: {Endorsements to address specific risks}
        regulatory_endorsements: {Endorsements for regulatory compliance}
    ```

## Insurance Procurement and Vendor Management

### Procurement Strategy
    ```yaml
    procurement_framework:
      market_analysis:
        carrier_assessment: {Insurance carrier financial strength and ratings}
        market_conditions: {Insurance market cycles and availability}
        competitive_analysis: {Competitive pricing and terms analysis}
    
      broker_management:
        broker_selection: {Insurance broker selection and evaluation}
        service_expectations: {Broker service level expectations}
        performance_monitoring: {Broker performance measurement and review}
    
      procurement_process:
        rfp_process: {Request for proposal development and management}
        carrier_presentations: {Carrier presentation and evaluation process}
        negotiation_strategy: {Coverage and pricing negotiation approach}
        placement_strategy: {Insurance placement and binding procedures}
    ```

### Carrier Relationship Management
- **Carrier Selection:** {Insurance carrier selection criteria and process}
- **Relationship Management:** {Ongoing carrier relationship management}
- **Performance Monitoring:** {Carrier performance monitoring and evaluation}
- **Panel Management:** {Insurance carrier panel management and optimization}

### Contract Management
    ```yaml
    contract_management:
      policy_review:
        coverage_verification: {Policy coverage verification and compliance}
        terms_analysis: {Policy terms and conditions analysis}
        compliance_tracking: {Policy compliance requirement tracking}
    
      renewal_management:
        renewal_planning: {Annual renewal planning and preparation}
        market_testing: {Periodic market testing and competitive analysis}
        negotiation_strategy: {Renewal negotiation strategy and objectives}
    
      documentation:
        policy_administration: {Policy documentation and record keeping}
        certificate_management: {Certificate of insurance management}
        compliance_documentation: {Regulatory and contractual compliance documentation}
    ```

## Claims Management

### Claims Handling Process
    ```yaml
    claims_management:
      claims_reporting:
        incident_notification: {Immediate incident notification procedures}
        claims_reporting: {Formal claims reporting to carriers}
        documentation: {Claims documentation and evidence collection}
        regulatory_notification: {Required regulatory notifications}
    
      claims_investigation:
        investigation_coordination: {Claims investigation coordination}
        expert_engagement: {Expert and adjuster engagement}
        legal_coordination: {Legal counsel coordination for complex claims}
        settlement_negotiation: {Claims settlement negotiation and approval}
    
      claims_monitoring:
        status_tracking: {Claims status tracking and reporting}
        reserve_management: {Claims reserve monitoring and adequacy}
        recovery_efforts: {Subrogation and recovery pursuit}
        performance_measurement: {Claims handling performance metrics}
    ```

### Claims Prevention and Mitigation
- **Loss Prevention:** {Proactive loss prevention and risk mitigation}
- **Safety Programs:** {Safety programs to reduce claims frequency}
- **Training and Education:** {Employee training for claims prevention}
- **Early Intervention:** {Early intervention to minimize claim severity}

### Recovery and Subrogation
    ```yaml
    recovery_management:
      subrogation:
        subrogation_identification: {Subrogation opportunity identification}
        recovery_pursuit: {Aggressive recovery pursuit and coordination}
        legal_coordination: {Legal coordination for subrogation claims}
    
      salvage_recovery:
        salvage_management: {Property salvage management and recovery}
        vendor_coordination: {Salvage vendor coordination and oversight}
        value_optimization: {Salvage value optimization strategies}
    
      business_interruption:
        loss_documentation: {Business interruption loss documentation}
        recovery_coordination: {Business recovery and restoration coordination}
        loss_mitigation: {Loss mitigation and duty to mitigate}
    ```

## Alternative Risk Transfer

### Self-Insurance Programs
    ```yaml
    self_insurance:
      self_insurance_strategy:
        retention_analysis: {Optimal retention level analysis}
        financial_capacity: {Financial capacity for self-insurance}
        regulatory_requirements: {Self-insurance regulatory requirements}
    
      program_structure:
        self_insured_retentions: {SIR structure and management}
        loss_funds: {Self-insurance loss fund management}
        claims_administration: {Third-party claims administration}
    
      performance_monitoring:
        loss_experience: {Self-insurance loss experience tracking}
        actuarial_analysis: {Actuarial analysis and reserve adequacy}
        cost_effectiveness: {Self-insurance cost effectiveness analysis}
    ```

### Captive Insurance
- **Captive Strategy:** {Captive insurance company strategy and feasibility}
- **Domicile Selection:** {Captive domicile selection and evaluation}
- **Regulatory Compliance:** {Captive regulatory compliance and management}
- **Performance Optimization:** {Captive performance optimization and value}

### Risk Pooling and Mutual Programs
    ```yaml
    alternative_programs:
      risk_pooling:
        industry_pools: {Industry risk pooling participation}
        mutual_programs: {Mutual insurance program participation}
        group_captives: {Group captive insurance participation}
    
      parametric_insurance:
        parametric_products: {Parametric insurance for specific risks}
        trigger_mechanisms: {Parametric trigger design and management}
        settlement_procedures: {Parametric claims settlement procedures}
    
      cat_bonds:
        catastrophe_bonds: {Catastrophe bond issuance and management}
        sidecar_investments: {Insurance sidecar investments}
        ilt_structures: {Insurance-linked securities structures}
    ```

## Regulatory Compliance and Requirements

### Insurance Regulation Compliance
    ```yaml
    regulatory_compliance:
      state_regulations:
        workers_compensation: {State workers' compensation requirements}
        automobile_insurance: {Commercial auto insurance requirements}
        professional_licensing: {Professional liability insurance requirements}
    
      federal_requirements:
        employee_benefits: {ERISA fiduciary insurance requirements}
        environmental_coverage: {Environmental insurance requirements}
        international_coverage: {International insurance compliance}
    
      industry_specific:
        financial_services: {Financial services insurance requirements}
        healthcare: {Healthcare professional liability requirements}
        construction: {Construction industry insurance requirements}
    ```

### Contractual Requirements
- **Client Requirements:** {Customer and client insurance requirements}
- **Vendor Requirements:** {Vendor insurance requirement management}
- **Lender Requirements:** {Lender insurance requirements and compliance}
- **Regulatory Requirements:** {Government contract insurance requirements}

### Reporting and Disclosure
    ```yaml
    reporting_requirements:
      regulatory_reporting:
        state_filings: {Required state insurance filings and reports}
        federal_disclosures: {Federal insurance disclosures and reporting}
        industry_reporting: {Industry-specific insurance reporting}
    
      stakeholder_reporting:
        board_reporting: {Board reporting on insurance programs}
        lender_reporting: {Lender insurance reporting and certificates}
        audit_reporting: {Insurance reporting for external audits}
    
      compliance_monitoring:
        requirement_tracking: {Insurance requirement tracking and compliance}
        certificate_management: {Insurance certificate issuance and management}
        renewal_compliance: {Renewal and compliance deadline management}
    ```

## Technology and Analytics

### Insurance Technology
    ```yaml
    insurance_technology:
      management_systems:
        insurance_management: [rmis_systems, insurance_tracking_platforms]
        claims_management: [claims_management_systems, tpa_platforms]
        certificate_management: [automated_certificate_systems]
    
      analytics_platforms:
        loss_analytics: [actuarial_modeling, predictive_analytics]
        market_analysis: [pricing_analytics, coverage_comparison]
        performance_dashboards: [insurance_dashboards, reporting_systems]
    
      integration_systems:
        erp_integration: {Integration with enterprise resource planning}
        risk_management: {Integration with risk management systems}
        financial_systems: {Integration with financial and accounting systems}
    ```

### Data Management and Analytics
- **Loss Data Analytics:** {Loss data analysis and trend identification}
- **Predictive Modeling:** {Predictive modeling for loss forecasting}
- **Benchmarking Analytics:** {Industry benchmarking and comparison}
- **Performance Analytics:** {Insurance program performance analytics}

### Digital Innovation
    ```yaml
    digital_innovation:
      insurtech_adoption:
        digital_platforms: {Digital insurance platform adoption}
        automated_underwriting: {Automated underwriting and placement}
        smart_contracts: {Blockchain and smart contract applications}
    
      iot_integration:
        risk_monitoring: {IoT for real-time risk monitoring}
        loss_prevention: {IoT-enabled loss prevention systems}
        telematics: {Telematics for fleet and auto insurance}
    
      artificial_intelligence:
        claims_processing: {AI for claims processing and investigation}
        risk_assessment: {AI for risk assessment and pricing}
        fraud_detection: {AI for claims fraud detection}
    ```

## Performance Measurement and Optimization

### Insurance Performance Metrics
    ```yaml
    insurance_performance:
      cost_metrics:
        - metric: {Total Cost of Risk}
          components: [insurance_premiums, retained_losses, risk_management_costs, administrative_costs]
          benchmark: {Industry total cost of risk benchmarks}
    
        - metric: {Insurance Cost per Revenue}
          calculation: {Total insurance cost / Revenue}
          trend: {Multi-year cost trend analysis}
    
      effectiveness_metrics:
        - metric: {Claims Recovery Rate}
          measurement: {Successful claims recovery percentage}
          target: {Maximize recovery from legitimate claims}
    
        - metric: {Coverage Adequacy Index}
          assessment: {Adequacy of insurance coverage for identified risks}
          review: {Annual coverage adequacy assessment}
    
      efficiency_metrics:
        claims_cycle_time: {Average claims processing and settlement time}
        renewal_efficiency: {Insurance renewal process efficiency}
        vendor_performance: {Insurance vendor performance scores}
    ```

### Benchmarking and Analysis
- **Industry Benchmarking:** {Insurance cost and coverage industry benchmarking}
- **Peer Analysis:** {Peer company insurance program comparison}
- **Best Practice Research:** {Insurance best practice research and adoption}
- **Market Analysis:** {Insurance market trend analysis and forecasting}

### Continuous Improvement
    ```yaml
    improvement_framework:
      program_optimization:
        coverage_optimization: {Insurance coverage optimization and enhancement}
        cost_optimization: {Insurance cost reduction and efficiency improvement}
        service_improvement: {Insurance service quality improvement}
    
      risk_improvement:
        loss_prevention: {Enhanced loss prevention and risk mitigation}
        claims_reduction: {Claims frequency and severity reduction}
        safety_enhancement: {Safety program enhancement and effectiveness}
    
      innovation_adoption:
        technology_adoption: {Insurance technology adoption and integration}
        market_innovation: {Insurance market innovation and new products}
        process_innovation: {Insurance process innovation and improvement}
    ```

## Specialized Insurance Programs

### Executive and Professional Lines
    ```yaml
    executive_lines:
      directors_officers:
        coverage_scope: {D&O coverage for directors and officers}
        side_coverage: {Side A, B, and C coverage explanation}
        entity_coverage: {Corporate reimbursement and entity coverage}
    
      employment_practices:
        epli_coverage: {Employment practices liability coverage}
        wage_hour_coverage: {Wage and hour coverage enhancements}
        third_party_coverage: {Third-party employment practices coverage}
    
      fiduciary_liability:
        erisa_coverage: {ERISA fiduciary liability coverage}
        benefit_plan_coverage: {Employee benefit plan coverage}
        cyber_fiduciary: {Cyber-related fiduciary exposures}
    ```

### Cyber and Technology Insurance
- **Cyber Liability:** {Comprehensive cyber liability coverage}
- **Technology E&O:** {Technology errors and omissions coverage}
- **Data Breach Response:** {Data breach response and crisis management}
- **Business Interruption:** {Cyber-related business interruption coverage}

### International Insurance
    ```yaml
    international_coverage:
      global_programs:
        master_policy: {Master policy with local admitted policies}
        dil_programs: {Difference in limits and conditions coverage}
        controlled_master: {Controlled master program structure}
    
      local_compliance:
        admitted_coverage: {Local admitted insurance requirements}
        regulatory_compliance: {Local regulatory compliance requirements}
        local_partners: {Local insurance partner coordination}
    
      political_risk:
        political_risk_insurance: {Political risk and credit insurance}
        trade_credit: {Trade credit and export credit insurance}
        kidnap_ransom: {Kidnap and ransom coverage for executives}
    ```

## Validation
*Evidence that insurance program effectively transfers risks, optimizes costs, and provides adequate protection*

## Quality Standards

### Bronze Level (Minimum Viable)
- [ ] Basic insurance program with essential coverage types
- [ ] Simple claims management and vendor relationships
- [ ] Basic compliance with regulatory and contractual requirements
- [ ] All required metadata fields completed

### Silver Level (Investment Ready)
- [ ] Comprehensive insurance program with systematic risk transfer
- [ ] Structured claims management with recovery optimization
- [ ] Effective vendor management and performance monitoring
- [ ] Regular insurance program review and optimization

### Gold Level (Operational Excellence)
- [ ] Advanced insurance program with alternative risk transfer strategies
- [ ] Sophisticated analytics and technology integration
- [ ] Comprehensive risk management integration and value creation
- [ ] Strategic insurance excellence with industry leadership

## Common Pitfalls

1. **Inadequate coverage**: Insufficient coverage leaving significant exposure gaps
2. **Poor claims management**: Ineffective claims handling reducing recovery and increasing costs
3. **Vendor mismanagement**: Poor insurance vendor relationships affecting service and cost
4. **Lack of integration**: Insurance program not integrated with overall risk management

## Success Patterns

1. **Strategic risk transfer**: Comprehensive risk transfer strategy optimizing protection and cost
2. **Proactive claims management**: Aggressive claims management maximizing recovery and minimizing losses
3. **Strong vendor partnerships**: Effective insurance vendor partnerships driving value and service
4. **Integrated risk management**: Insurance program fully integrated with enterprise risk management

## Relationship Guidelines

### Typical Dependencies
- **RSK (Risks)**: Risk assessments drive insurance coverage needs and program design
- **FIN (Financial Model)**: Financial capacity drives retention strategy and program structure
- **LEG (Legal)**: Legal requirements drive contractual and regulatory insurance compliance
- **OPS (Operations)**: Operational risks drive specific coverage needs and loss prevention

### Typical Enablements
- **CTL (Controls)**: Insurance program enables risk control and loss prevention activities
- **COM (Compliance)**: Insurance compliance enables regulatory and contractual compliance
- **REP (Reporting)**: Insurance reporting enables stakeholder communication and disclosure
- **AUD (Audit)**: Insurance program enables audit assurance and risk management validation

## Document Relationships

This document type commonly relates to:

- **Depends on**: RSK (Risks), FIN (Financial Model), LEG (Legal), OPS (Operations)
- **Enables**: CTL (Controls), COM (Compliance), REP (Reporting), AUD (Audit)
- **Informs**: Risk management, financial planning, legal compliance
- **Guides**: Coverage decisions, claims management, vendor selection

## Validation Checklist

- [ ] Executive summary with clear purpose, insurance strategy, coverage approach, and risk retention
- [ ] Insurance framework with philosophy, strategy, and scope definition
- [ ] Risk assessment with identification, gap analysis, and needs assessment
- [ ] Program design with architecture, coverage types, and policy management
- [ ] Procurement and vendor management with strategy, relationships, and contracts
- [ ] Claims management with handling process, prevention, and recovery
- [ ] Alternative risk transfer with self-insurance, captives, and pooling programs
- [ ] Regulatory compliance with requirements, reporting, and disclosure
- [ ] Technology and analytics with systems, data management, and innovation
- [ ] Validation evidence of effective risk transfer, cost optimization, and adequate protection

---

## Related Documents

- [Back to Document Types](/docs/document-types)
- [Domain: Risk & Governance](/docs/domains/risk-governance)
- [Full Specification](/spec/v1-0-0)