Key policies transferring risks threatening the company’s business operation (e.g. natural disasters or emergency insurance) to their insurers, should be highly effective. This indicator in relation to insurance contracts means that the sums insured and principles of compensation should be determined in such a way as to compensate for potential damage as completely as possible, without resorting to alternative, more expensive sources of financing (e.g. loans).
Low performance indicators can be established for policies of a different nature whose main purpose is, for instance, financing of smaller, repetitive damages which individually do not constitute a significant burden of the insured entity.
The experience of EIB indicates that implementation of audit recommendations allows the Client to avoid risk of lack of compensation in a crisis situation. In addition, through an introduction of well-thought out and coherent mechanisms of the Client’s co-responsibility for recurring loss events, the premium is reduced.