Keith Boyer is Managing Partner at KMRD Partners Inc., a risk and human capital management consulting and insurance brokerage firm located in the Philadelphia region serving clients worldwide. KMRD works to protect clients’ assets by reducing their cost of risk. Boyer can be contacted at firstname.lastname@example.org.
As anyone working in the construction industry knows, some risks are worth taking, while others simply aren’t. Your company’s risk control process should be placed within the latter group. This is no place for amateurs.
By hiring a professional risk management outsourcing partner, your firm will gain the peace of mind that comes from working with trained, experienced risk control coordinators. The primary job responsibility of these highly qualified individuals is to assist in creating and implementing programs to favorably impact your firm’s loss experience and minimize its cost of risk. Risk control coordinators will also work to devise strategies to prevent accidents from happening, which can lower your workers’ compensation costs.
To be successful, any risk manager or risk management team must possess vision, skills, education, experience, knowledge, temperament and tools to identify, mitigate and transfer risk. In choosing a risk management outsourcing partner, a company must also determine if this individual or team possesses a good fit with your organization. This “outsider” must earn the trust, respect and credibility required to develop, create commitment and properly execute the risk management plan “inside” your organization.
A risk management plan, no matter how brilliant, must be embraced by all members of your team to succeed. Otherwise, it will be as if you had thrown good seed onto infertile ground. The following are 10 expectations you should have of your risk management outsourcing partner:
- Policy and endorsement reviews—Your risk management outsourcing partner should commit to conducting policy and endorsement reviews to ensure policies are broadly written so there is a higher likelihood coverage will respond prior to the filing of a claim.
- Contract reviews—Your risk management outsourcing partner should exceed compliance requirements by including a comprehensive contractual risk transfer analysis. Contractual risk transfer is the least expensive way to transfer risk. Also, if your outsourced risk manager can demonstrate to the underwriter how your risk is being transferred contractually, reduced rates and broader coverages can potentially be achieved for your organization.
- Bid and accrual support—Bid accrual and support assists you as the insured in pricing your products and services. The outsourced risk manager should also be prepared to assist you in projecting the impact of business changes on insurance costs.
- Loss-sensitive adjustment forecasting—This forecasting activity of how a loss sensitive program changes at various loss levels assists you in budgeting costs and cash flows.
- Experience modification projections—These projections help to inform you regarding the impact your experience modification factor will have on your workers' compensation premiums. Predictability of information leads to better decision-making.
- Acquisition due diligence—Acquisition due diligence can provide you with a better understanding of the risks associated with a company being considered for acquisition. This includes an understanding of coverage, potential off balance sheet risks, strategic risk planning and risk infrastructure. This information often assists in negotiating a lower price.
- Cost-benefit analysis—This analysis leads to better-informed decision-making, particularly with optional coverages and in determining the appropriate retention/deductible levels.
- Coordination of loss control and claims support—This level of support is designed to achieve results and not be duplicative or to stifle the goal of making money or achieving the mission.
- Midterm stewardship reports—Your outsourced risk manager should commit to issuing these reports to demonstrate it is focusing on areas important to you as the insured and to make sure if there is a mid-policy-year correction, it can be made efficiently.
- Developing a strategy and managing the marketing of the insured to the carrier—This activity will help you to know your insurance program is the most comprehensive and competitive program available. Your outsourced risk manager should avoid market confusion by using a consistent submission in the marketplace, separating you from others through the level of detail and depth of knowledge, enabling qualified carriers to provide broad coverage and services at a competitive price.