Influencing your insurer
23 January 2013
There are plenty of opportunities for companies engaged in good risk management to reduce their insurance premiums as long as they effectively communicate the measures they have taken, says Jim Wilkes Companies who wis
Companies who wish to contain costs in their business may not be presenting their risk management regime to maximum effect. It is a common experience when we talk to customers that we tease out much more relevant information to us than is usually put forward by companies in their risk presentations. Risk presentations are often kept brief in the interests of efficiency, but this can result in the omission of information which might favourably influence an insurer. Big companies with in-house risk personnel are more adept at ensuring that their risk presentations communicate fully what the company is doing to maintain and improve health and safety standards.
Smaller companies may initially find it more difficult to influence their insurer because premiums for smaller companies may seem too small to be able to do much by individual risk differentiation. However, the insurance market like other sectors has periods when it becomes more difficult to place risks, or terms become more expensive. This is when any company that has incorporated good risk management into their business activities and can evidence this can improve their negotiating position.
Suggested measures Insurers vary in their underwriting appetite. What influences one insurer may not be so relevant to another. Your broker will be able to guide you in this respect. As a general rule, the following features would be regarded as positive.
Firstly, does the company operate a health and safety regime in accordance with a recognised management standard? The leading one in health and safety is OHSAS 18001 which is akin to an ISO standard. If you do operate in accordance with OHSAS then make sure your broker and your insurer know. Operating to a recognised management system tells your insurer that health and safety is being managed in accordance with a best practice specification. The adoption of a systematic approach to health and safety should ensure that risks are well controlled, minimised and thus the ability of the insurer to defend claims is increased.
Even if you do not operate to a recognised management system, can you evidence your approach to risk management? Do you have staff trained in health and safety issues? Do you carry out regular audits? Have you reviewed your approach to risk assessment? Can you evidence your approach to the provision of safety equipment and the use, maintenance and enforcement of the use of PPE? What about environmental improvements? Sometimes an improvement undertaken for environmental reasons can impact favourably on the workplace health and safety risks, for example phasing out of chemical solvents in favour of water-based ones.
Are you an ISO14001 organisation? Generally organisations who implement a management systems approach in one area like environmental management will carry over that thinking to their health and safety arrangements. Is the company familiar with the IOD document 'Leading Health and Safety at Work', which lists the attributes required of company directors in terms of health and safety? How about the Health & Safety Performance Index on the HSE website? If you complete this anonymous self assessment and get a good score (say 75%+) you might want to cite that to your broker. Also, if you have had problems in the past, for instance a health and safety conviction or a poor claims experience, whilst this is not positive news, the response of your company to the issue and what you have done to improve performance in the future would help to present your risk. If you have acquired another company which has a poor claims history or has had problems with regulators, then how relevant is that history to your future? If you are putting in a new management structure and new systems such proactive measures should improve the profile of the acquired company and that information would assist your broker in presenting a more positive view of the risk going forward. To illustrate this point one of our customers acquired another business and it was revealed that this business was subject to ongoing regulatory action because of extensive failures to protect the workforce against noise levels and dust exposure. This was clearly not a risk that would attract an insurer. However, the customer engaged the assistance of a supplier of PPE to help with the problems. In conjunction with the PPE company, a regime of immediate risk improvements was introduced including appropriate PPE. The customer was also able to commit to introducing more long-term improvement in health and safety by controlling noise and dust exposure at source as part of an approved capital expenditure programme. It was the commitment to improve the situation which we as insurers were able to respond to.
The moral is clear; if you are managing your workplace risks well, make sure your insurer and broker know about it.
Jim Wilkes is a senior casualty underwriter at Zurich Insurance.