David Hanley – Risk Control Technologies with Guest Contributor: Rick Fineman, Vice President of Risk Management – ICW Group
Has “inspection” become a four-letter word for insurance companies? Many progressive insurers have eliminated the term altogether from their operational vocabulary – and for good reason. Inspection conjures up an adversarial image of stern site visits, onerous checklists and imposed requirements.
The preferred term today is “risk consultation.” It shifts the conversation away from simply identifying issues to working collaboratively with insured clients on risk management and loss reduction. Think of it as a team-based rather than unilateral approach to customer relations.
Shift the Conversation
Traditionally, insurance loss control has been very reactive. If an account had negative claims experience, an inspector or third party would conduct a site visit or "loss control inspection" to collect information and make recommendations. Insurers typically offered limited support for implementation. Sometimes, the steps were followed (at least for a short time); in other cases, it was lip service. We call this reactive approach “Third Seat Consulting.”
The next stage is “Second Seat Consulting,” which involves the insurer providing materials and support for loss reduction, with more frequent follow-ups. It offers an incremental improvement over the traditional inspection-based approach of the third seat, but it does not truly transform the loss control relationship between insurer and client.
Moving to First Seat Consulting
“First Seat Consulting” provides the best opportunity to achieve lasting results in loss control. In this scenario, insurers develop plans to work collaboratively with clients to fix key risk issues. The goal is to prioritize the most substantial risks, provide active assistance in remediation implementation procedures as well as loss control recommendation management and jointly create a schedule of completion that allows little room for lag time.
There are tangible steps to achieve this valued role in loss control consulting. Performance-driven insurers are starting to leverage more than just the on-site visit in effectively delivering First Seat Consulting approaches.
The expanded loss control tool belt includes:
- Live and on-demand webinars and podcasts
- Targeted safety bulletins
- Providing safety specialists ‘on call’
- Email campaigns
- Video libraries
- Major loss source or risk Source focused campaigns
- Industry blogs and discussion boards
- Collaboration features built into loss control management systems.
Modern insurers also realize that servicing accounts with poor loss ratios is only the first step. To truly achieve a sustainable and meaningful result, a more proactive approach is required. Instead of seeing the trees of individual client loss experience, companies are looking at the forest of commercial account classes and profiles – even if a specific client doesn’t warrant the focus on loss reduction alone.
Proactive Risk-Based Approach
Moving to a proactive, systematic risk-based approach for risk management means that insurers oversee broad account categories, apply knowledge and intervene at early opportunities to avoid negative loss experience. Information is targeted and proportional to the account at hand – be it a manufacturing firm, construction operation or retail outlet.
For example, machine shops with certain characteristics may have poor loss experience as a class of business. The goal for the insurers should be to quickly identify which accounts within their loss control management system fit the bill and target them for tailored loss reduction activities. Insurance companies can illustrate real-life scenarios and show shop owners how risk strategies can help them reduce claims, have more competitive premiums and ultimately improve their business outcomes.
Importantly, the insured sees the loss control consultant (and insurer) as a trusted advisor instead of an “enforcer” or “inspector.” Communication is open, co-operation is easier (even sought) and results are improved. Clearly, the view is better from the First Seat.
Next: The Real Benefits of a Consultative Approach