coverage-gap-analysis

Coverage Gap Analysis Skill

Organisations rarely know what they're not insured for until the loss arrives. This skill crosses the risk register against the policy portfolio and makes the gaps, the thin spots, and the accidental overlaps visible — then ranks the fixes by how badly the gap could hurt.

What This Skill Produces

• A risk register × coverage matrix (which policy responds to which risk)
• Flags per risk: covered / uncovered / underinsured / double-covered / consciously retained
• A deductible stack review (total retained exposure across lines vs risk tolerance)
• Recommendations ranked by expected-loss severity

Required Inputs

Ask for missing items; if no formal risk register exists, build a first-pass one from the business description and label it [draft register — validate with management]:

• Risk register — or at minimum a business description (operations, assets, revenue, geography, key dependencies)
• Policy portfolio — each policy's line, limits, deductibles, headline exclusions
• Risk tolerance — how much loss the organisation can absorb in a bad year, even roughly
• Known worry list — what management already loses sleep over

Analysis Framework

1. Build the matrix. Rows = risks (sweep at least: property damage, business interruption, general/products liability, professional liability, cyber incl. BI and liability, D&O, crime/fidelity, employment practices, key-person, supply-chain failure, regulatory/legal defence, environmental, terrorism/political where relevant). Columns = policies. Each cell: responds fully / responds partially (state the limiting exclusion or sublimit) / silent.

2. Flag each risk with exactly one status:

• Uncovered — no policy responds; distinguish uninsurable from unpurchased.
• Underinsured — a policy responds but the limit or a sublimit is materially below plausible loss (test against a stated worst-case scenario, not the premium-friendly one).
• Double-covered — two policies respond; note the other-insurance clauses and who pays first, because overlap creates dispute, not extra protection.
• Consciously retained — management has explicitly accepted it. Only management's explicit statement earns this flag — silence is "uncovered".

3. Deductible stack review. Sum the deductibles/retentions that could plausibly hit in the same bad year (e.g. property + BI + cyber after one event; or 2–3 uncorrelated events). Compare the stack to stated risk tolerance. A stack above tolerance is itself a finding, even with every risk "covered".

4. Rank recommendations by expected-loss severity. For each gap, band severity (catastrophic: threatens solvency / severe: > a year's profit / moderate: absorbable with pain / minor) and rough likelihood (recurring / plausible / remote). Fix order: catastrophic-plausible first; severity beats frequency — a remote solvency-threat gap outranks a frequent nuisance gap.

Output Format

Coverage gap analysis: [organisation / date]

1. Method & sources — register used, policies reviewed, what was assumed.

2. Risk × coverage matrix — table: risk | responding policy | limit/sublimit | deductible | status flag.

3. Findings — grouped: uncovered / underinsured / double-covered / consciously retained, each with the scenario that exposes it.

4. Deductible stack — table + comparison to risk tolerance.

5. Recommendations — ranked table: # | gap | severity band | likelihood | recommended action (buy / raise limit / restructure / formally accept) | indicative priority.

6. Open questions — what needs management or broker confirmation.

End with: "This analysis is analytical support, not a coverage determination or advice to purchase. Placement and retention decisions follow your organisation's policy and the advice of your licensed broker/adviser and applicable regulation."

Quality Checks

• [ ] Every register risk appears in the matrix with exactly one status flag
• [ ] Underinsurance verdicts cite a worst-case scenario, not a gut feel
• [ ] "Consciously retained" appears only where management explicitly accepted the risk
• [ ] Double-coverage findings name the other-insurance/priority question
• [ ] Deductible stack is compared to a stated risk tolerance figure
• [ ] Recommendations are ranked with severity dominating frequency

Anti-Patterns

• [ ] Do not mark a risk "covered" on policy line name alone — check the limiting exclusion or sublimit in the cell
• [ ] Do not treat silence as acceptance — an undiscussed gap is "uncovered", never "retained"
• [ ] Do not rank by likelihood alone — a remote solvency-threatening gap outranks a frequent small one
• [ ] Do not ignore overlaps because "more cover is fine" — overlap creates claims disputes; name who pays first
• [ ] Do not invent policy terms or limits — mark unavailable wordings [to confirm] and say what the answer changes