Question

Do you feel that companies may become less accountable for training standards if they are able to sidestep the issue by purchasing insurance that would cover them in cases of employee misconduct?

Answer 1

No, companies would not become less accountable for training standards if they sidestep the issue by purchasing insurance that would cover them in cases of employee misconduct.

This is because of the reasons mentioned below:

1. It would not always be a monetary loss that the company is facing which will be covered by insurance. In case of employee misconduct, the company's brand value might get affected due to which its customers can get affected. Customers might want to disassociate themselves with the brand. In another scenario, the share price of the company (if it is a public company) might also fall. Basically, the company faces a REPUTATION risk which will not be covered by insurance.

2. In case of employee misconduct, the company might get involved in lawsuits. Now, even though the payment of these legal matters might be covered by insurance, but the company might lose certain privileges that it enjoyed. It could face some serious consequences which might not be covered by a monetary insurance.

Thus, even though the company might not be affected in a monetary sense, it could have a repetitional risk through which there could be irrepairable damage caused thus affecting the brand equity of the company.

Hope this helps. Thank you and all the best.