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RISK MANAGERS ARE spending a great deal of effort assuring that their organizations are not exposed to the Year 2000 problem.

But in addition to assuring their own systems and those of their suppliers are in order, and that they will continue in business after Jan. 1, 2000, they also must assure that they are protected from the potential flood of litigation that will ring in the year 2000.

Not only does that mean risk managers need to clarify their coverage situation, but they also should push lawmakers to offer protection from liability for unforeseen consequences of the computer bug.

A lawmaker in Florida is taking the initiative and proposing legislation that would limit the liability of businesses that make good-faith efforts to become Year 2000-compliant but still produce unforeseen damages to third parties. Other states have considered similar legislation, but to date it has been focused on assuring public agencies remain immune from Year 2000 liabilities.

The legislation in Florida, introduced last week by Sen. John Grant, R-Tampa, would restrict lawsuits for Year 2000 losses in several ways (see story, page 1). Among other things, the proposal would limit class-action suits, cap punitive damages, offer some immunity for directors and officers and require Year 2000 compliance consultants to carry professional liability insurance.

But Florida is just one jurisdiction. Don't businesses in Alaska, Puerto Rico, North Dakota and elsewhere need the same assurances that they will not be on the hook of liabilities they could not have reasonably foreseen? Of course. But unless risk managers and their organizations lobby for such relief, and soon, it is unlikely to be enacted in time to do them any good.

Lobbying efforts must begin at the federal and state levels now if measures are to be debated and passed in 1999.

As for insuring the risks that remain, businesses by now should realize they are not protected for damage directly caused by the Millennium Bug under most existing insurance policies. Forty-nine jurisdictions, including the District of Columbia, have approved Year 2000 endorsements and exclusions introduced by the Insurance Services Office Inc. This policy wording basically clarifies that damage directly caused by Year 2000 computer failures won't be automatically covered.

This makes sense to us, as it is unlikely the risk of Year 2000 losses is contemplated in the underwriting and pricing of most property and liability coverages.

Risk managers have a right to expect, however, that consequential damages will be covered. In other words, the possible computer crash on Jan. 1, 2000, won't be covered, but damage from an unexpected fire that follows should be.

In addition, we expect that risk managers will be able to obtain specialized property and casualty coverage that will address the primary risk. If they are willing to pay for the coverage and are taking all possible steps to be compliant, they should be able to obtain protection from unforeseen events. In this competitive market, an increasing number of insurers no doubt will be willing to take on this risk.

Many business are doing all they can to minimize their exposure to this problem and eliminate the risk of damage to others. Those that are taking these risk management steps deserve insurance and legal protection from unforeseen losses.