RISK MANAGEMENT: Controlling Your Company’s Insurance Costs
Total Cost of Risk: A company’s soft and hard costs which contribute to the overall cost of their insurance program.
For too long insurance agents’ jobs has been oversimplified to just the placement of insurance and issuing certificates of insurance. The CFA and Arthur J. Gallagher have set a goal to be the best client service company in the industry and to do that, we will stand out from our competition by offering services typically
Controlling your company’s insurance costs is not something that happens overnight. It is a progression which requires continued vigilance and a balanced, measured approach. Regrettably there is no one stop solution to achieving and sustaining your company’s optimal Total Cost of Risk (TCOR). Every company is unique and no solution is going to be one size fits all. It is knowing these fundamental facts that led the CFA to partner with Arthur J. Gallagher to create a program for CFA members.
Soft Costs
So how are we going to do it differently than your current program? How are we going to get your company to optimal TCOR? Like any good building, first things first, we need to start at the foundation. Gallagher will conduct a thorough policy coverage review of your insurance coverages. We will also conduct an assessment of your operations to identify if your current insurance coverage has been customized for your company. This accomplishes several things. First, it allows us at Gallagher to get to know you, your company and your safety culture. Second, it identifies any potential gaps in coverage you may have which if left unchecked could cause an uncovered loss event. As you know, an uncovered loss would directly hit your bottom line. We are not looking to just place your insurance coverage, we want to partner with you to create a long term, practical and beneficial broker-client-carrier relationship. Additionally, we are analyzing CFA members risk management programs across the country to develop best practices. This will allow program members the option of implementing the best methods and will help members of all sizes stream- line this process. The idea is to save money on redundancies. Why should each member duplicate efforts on establishing their own best practices when the information may be out there already?
Hard Costs
The second step is taking a look at items which contribute to the hard costs of premium. Examples include analyzing your company’s Worker’s Compensation Modi cation Factor, loss history and identifying any loss trends. Doing this analysis will help us explain any irregularities in your loss history as well as current and future risk mitigation steps your company has or will take.
The more informed we are about all CFA members, the better we can address any areas of concern about your risk. We can then use these analytics to benchmark your company against your peers and provide informed guidance on what your peer group is purchasing to help you make more informed purchasing decisions. This is the most critical step of the process, and it is often where we lose the insured’s focus. Think about how much it impacts your overall business. An out of whack insurance program runs costly and may not be providing the benefits your company needs or worse, you’re buy- ing coverage you don’t actually need. This contributes to job costs which in the end could make your bid less competitive and ultimately hand that job opportunity over to a competitor.
After we package all of your information, including compiling your risk profile, company overview, loss trends and risk mitigation factors we will then set up a meeting with the underwriter to specifically discuss your company. As we said earlier, this is a tailored program to your industry, but it is also a tailored program to your company. It is during this meeting we will make sure the underwriter thoroughly understands all aspects of your company. Think of it this way, if you go into a store without a list, there is no direction, you may have a general idea of what you want but you’re bound to forget the eggs. We want to guide the underwriter as much as possible so we come out of the process with an insurance program that is not only competitive but addresses your company’s insurance needs.
The Approach
Enough about hard costs. Premium, this is where most brokers and insureds spend their time and this is where the CFA and Arthur J. Gallagher are going about it differently. We are taking enterprise risk management and utilizing those tools to bring your company the benefits, the same benefits large corporations have known about and have been taking advantage of for years. Remember the second step where we gathered your data? After further review, we will have identified your company’s risks and with the help of Gallagher Risk Services we will assist you in reducing, and where possible, eliminating that risk to your company. We have a vast amount of resources built into this program’s success. Gallagher Risk Services is developing CFA weekly toolbox talk topics, OSHA training, independent safety self-audit programs, online safety training and resources along with helping you to establish a sustainable return to work program. Proactively, Gallagher Risk Services has already completed a thorough review of several concrete foundation company’s safety manuals and created a best practices manual. We will continue to adapt this as we notice unique differences between company’s safety programs so as the CFA program continues to grow, those companies making it up will be the best risk in the industry. Over time, this will lead to CFA insurance program members winning more jobs due to a streamlined, optimized and cost effective insurance program. It’s all connected. We are also looking into ways to support companies in contract reviews and creating methods of pushback on some of the risk transfer the General Contractors are forcing down upon your company.
Have An Advocate
Inevitably, no matter how good we are and what we jointly do to manage your risks someone, someday will have a severe claim. When that does happen, we have dedicated claim advocates that specialize in Workers Compensation, General liability and Property assigned to the CFA Insurance Program. These individuals have backgrounds that range from an insurance carrier adjuster to the court room with legal experience in advocating on client’s behalf with the insurance carrier. Our risk advocate will work with you and the insurance company to resolve the claim in as mutually agreeable fashion as possible.
In the end, our philosophy is this: If we manage the soft costs, which so many brokers and insured’s alike ignore, we can make your company a better risk and ultimately more competitive.
ABOUT THE AUTHOR
Christopher Mowery is a Client Service Supervisor for Arthur J. Gallagher & Company. He has over ten years of experience marketing and servicing Construction and Risk Management accounts. For more information about this article, Christopher can be reached at Christopher_Mowery@ajg.com. More information on Gallagher can be found at their website www.ajgrms.com.
