From: John Jenkins <JJenkins@TavaTech.com>
To: "'Steve Childs'" <schilds@earthlink.net>
Subject: RE: TOPRO Y2K insurance issues
Date: Mon, 8 Sep 1997 16:34:10 -0600
MIME-Version: 1.0
Steve: Thanks for your E-Mail. All your points are very well taken.
In response I offer:
1) We are already in discussion with at least two business
interruption insurance providers who came to us looking for an answer to their need to address the factory floor component in their client base.
I have meetings with these two organizations this week....if the
outcome continues positive, then we will consider how to address this
from a management perspective.
2) I will have to think about the issue of "insurance certified" given the potential liability implications.
3) No remediation is "fool proof". We as all other providers will
contract around this issue...that is not to say that clients will not
eventually look for scape-goats should they not be running on January
1. On replacement systems, we will accept Y2K compliance
responsibility as that is controllable for us. This is one reason I
believe that replacement will be a preferred alternative in many cases.
Thanks for your interest and support.
PS. Consider the same issues as applied to banks and their loan
portfolios....
-----Original Message-----
From: Steve Childs [SMTP:schilds@earthlink.net]
Sent: Sunday, September 07, 1997 11:20 AM
To: John Jenkins
Subject: TOPRO Y2K insurance issues
I am an individual investor in TPRO, attempting to understand insurance implications of Y2K solutions and compliance. The issues I outline below both raise questions and perhaps an idea or two. That is, if I am on the mark.
1. Insurance companies seem to be leaning toward exclusionary Y2K
provisions in their policies, so that companies cannot rely on coverage as a short-term Y2K solution. This seems like good news for Y2K vendors.
2. I have read that insurers are charging high Y2K audit fees to see if
they will cover a company's computer-automated systems. Also, even
after a fix has been put into place, it seems that the insurance
company still would need to do an audit of the Y2K solution to see if
it falls into compliance with a company's primary policy.
Couldn't this become a whole new revenue stream for TOPRO,
assuming you could form strong relationships with insurance companies,
where TOPRO would perform post-solution Y2K insurance-certification
compliance audits? My understanding is that your $7000 CD is to
help companies assess their Y2K problems. Then you go and do the work.
But I would think a similar post-solution, insurance-certified
audit CD could be developed, no?
3. Speaking of relationships with insurers, what if TOPRO led the
way to create a new class of factory floor Y2K vendor, called "Y2K
insurance-certified ", which would pre-certify solutions or subsets of
solutions offered by such a vendor based on track record and other
parameters? Conceivably, this could save a company the expense
of a post installation compliance audit, which would make "Y2K
insurance-certified" vendors less expensive and more reliable to
companies needing Y2K solutions.
4. Given the insurer's reluctance to cover Y2K problems/solutions, it
seems that companies will try to force Y2K vendors to carry the
liability for thier fixes, beyond direct costs. Such as a factory floor shutting down due to bugs in the fix. Is this a real or imagined problem? How "foolproof" are TOPRO's (or any vendor's) Y2K solutions? I can imagine that right around 2000, any work stoppage caused by an automation control system is going to get blamed on any and all SI, Y2K vendors that touched the machines!
5. Do you have a high-level insurance and regulatory specialist in
house that works directly with insurance company relationships? If not, wouldn't such a person, or at least a full-time consultant, pay for themselves in spades?
Just some thoughts and questions. Thanks for your time, and your
response.
Regards,
Steve Childs |
