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I often speak to firms after they have merged, acquired or have been acquired by another accounting firm.  In the aftermath, one of the issues that often does not get discussed, is the other party's claims history and attitude towards Risk Management.  There are times that some firms have claims, cannot get coverage afterwards and will then put themselves “on the block” as a means to find someone that does have coverage.  In your process of evaluation, there are many items you need to check off in evaluating your decision.  Risk Management needs to be a part of that evaluation.  You would not do a deal if you knew the other party was not a good risk.  This is something you need to know up front, before getting further into the details.  Knowing the other party's claims history also alerts you to possible future problems if the party has a laissez-faire attitude toward claims prevention.

This could also be an opportunity to align your Risk Management policies with the other party going forward.  Discussing the Professional Liability Insurance and how to handle it as a “team”.  This is also a good time to discuss the taboo “what if things don’t work out”, how will the insurance be handled.  Often times, if insurance policies get combined, there will be no opportunity to separate them if things don’t work out.  Discuss Tail options and how long you would want coverage to report claims going into the future.  Now is the time to discuss these issues, before problems arise..  As always, if you would like to discuss this in further detail, never hesitate to contact your agent for answers to any questions you may have.

Paul Morris, RPLU, CLU
Program Manager -  Mitchell & Mitchell

(415) 883-2525
Posted 3:41 PM

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