Insurance Company Loss Control Recommendations – Are they really necessary?




insurance company loss control

For larger companies, especially in manufacturing, wholesale distribution, trucking, and contracting it’s very common for your insurance company loss control/risk control engineer to visit with you on a regular basis.

Regular means once or twice a year and maybe more frequently.

The title for this job will change from insurer to insurer but this person’s job is not to make your life miserable, but instead to help you reduce the chances of claims from occurring.

Now you may think – well that only benefits the insurance company. The fewer claims I have the less they pay out and the more profit they make.

This is true, but the fewer claims you have helps you save money in two ways.

The first and most obvious is that accounts with fewer claims than their peer group have much greater negotiating leverage when it comes to the renewal process.

Whether you elect to renew with your current insurer or test the marketplace and shop your renewal; a clean loss run will be the golden ticket to lower premiums – even in a hard market compared to your peers.

The second money-saving element is that with every claim you incur, you also incur out-of-pocket costs not reimbursed by your insurance.

These are called indirect loss costs and come in the form of lost productivity, waste, impact on employee morale, regulatory fines, penalties, and a lot more.

By some estimates, indirect costs may cost you 4 times as much as what your insurer has paid in a claim.

Beyond costs, though is the basic fact that risk control helps you prevent claims, and most of those claims involve injuries to employees or customers, or other third parties.

Reducing the chances of an event that involves human pain and suffering should be enough of a reason to work with insurance company risk control specialists.

Here’s the bottom line when it comes to insurance company loss control/risk control reports and recommendations.

It may seem like another hassle to deal with, but most of the time the recommendations can help improve your company’s productivity and profitability.

Not sure how to comply with recommendations? Overwhelmed? Don’t know where to start?

This is where your broker can earn their commissions and get involved. Often you’ll get a letter with a handful of recommendations that you don’t really understand.

I get it – your job may be manufacturing widgets, why would you know the value of a contractual risk transfer protocol? or any other recommendation?

Your broker, if they are skilled and worth their salt, can step in as the intermediary to help you understand what risk control is asking you to do, but more importantly what the outcomes will look like, and how it will benefit you to comply.

I like to view insurance company loss control/risk control recommendations as “projects” that have an end goal of completion in mind.

You don’t need to go it alone, so work on these recommendations as projects that are accomplished once per quarter for example makes the task less daunting. Get your broker involved. That’s what they’re there for.

And, if your broker doesn’t know what to do or how to help…. maybe you’ve outgrown your broker and it’s time to look for a new relationship. I hope you’ll consider giving me a call.

A final word on insurance company loss control/risk control recommendations.

Failure to complete recommendations can lead to an insurer non-renewing your policy. Especially if claims that could have been prevented occur.

Getting replacement insurance is going to be tough since most larger accounts are inspected prior to quotes being released, and if risk control inspectors see the same types of risk issues that your current insurer is non-renewing you for – it’s going to be difficult to even get a quote.

So, if you don’t understand risk control recommendations or procrastinate on getting them done, or don’t know where to start – take this seriously and ask your broker for assistance.

If they can’t help get it done, start looking at replacing your broker.

Want to chat further about how I work with middle-market clients on these sorts of issues? Let’s chat.

Thanks!

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