Santa Claus urged to improve his Risk Management

Risk management and insurance experts at the International Risk Management company and Insurance Broker Lockton made a list and checked it twice of all of the exposures K. Kringle Manufacturing Inc. faces on an annual basis.

The Insurance report discusses suitable insurance coverages with recommended limits, and the cost to protect Santa and his operations from financial ruin should the unexpected occur.

The report gave 14 claims scenarios with examples of some of the exposures his operations face. It covered every likely scenario from toys in transit (ocean marine) and reindeer injuries (exotic animal coverage) to airborne sleigh accidents (aviation) and coal handling for “naughty” kids (pollution). Included also is crime coverage to protect against theft by The Grinch.
Santa Claus will need about $1.2 million to pay for his insurance coverage.

That will provide about $1.175 billion in coverage for all of the exposures his workshop faces in the making and delivery of toys to children around the world. A copy of this report can be found by clicking on this link Santa Clause Risk Report by global risk management and insurance brokerage firm Lockton.

The premiums range from $5,000 for a Lloyd’s policy to cover one of Santa’s most valuable assets, his beard, to $754,000 for workers’ compensation and employers liability coverage for Santa and his employee elves.

Lockton’s say the risk management program they developed should “help ensure the smooth manufacturing of millions of toys, a content workforce of elves, and tremendous peace of mind for the jolly man in the red suit.”

In one claims scenario, half of the “naughty or nice” list is lost when the data processing system crashes due to a failure at the local power facility at the North Pole. Lockton says this points out the need for an electronic data processing policy, which will provide up to $3 million in coverage to reconstruct the data. The premium is only $12,000.

Lockton’s plan also has thought about the possibility of a claim when the wrapping paper section of the workshop catches fire because their risk survey idenitified that Christmas decorations are stored too close to the Yuletide fireplace. They recommend a sum insured of $100 million in property coverage for the workshop and its contents.

In another claims scenario, mistletoe hanging above the candy cane converter accidentally falls into the electrical box of the machine. The conveyor explodes due to a surge of electrical current and the system is inoperable for more than a week. Since Santa’s Workshop has a lot of toy manufacturing equipment, Lockton recommends Santa purchase $50 million in equipment breakdown coverage to cover loss from the accidental breakdown of equipment.

Lockton’s “The Night Before Riskmas: A Holiday Risk Management Tale” opens with a customized version of the familiar “A Visit from St. Nicholas,” written by Clement C. Moore in 1822 and popularly known as “The Night Before Christmas.”

A great example of professional risk assessment and Insurance recommendations which we strongly suggest Santa Claus implements before he commences his massive distribution exercise around the world Christmas Eve.

Read the report here