Something you never want to have in your vocabulary when running a business is “why didn’t I know about this risk?” or “we’re liable for HOW much?” Regardless of the position you’re in, taking the right approach can get you ahead of risks that come with the business. So, the question on the table is “how do I get ahead of it?”
Simple: start acting proactively instead of reactively. After all, you wouldn’t want to come home from the hospital, get hit with a huge bill, and then decide it’s time for health insurance, right? How many businesses (or insurance brokers) consistently think about their third-party risk exposure? The answer may surprise you. While insurance risk can be a huge liability it’s often an afterthought until the business is hit with a job-site or vendor accident. The insurance industry can benefit greatly from planning ahead for scenarios that can potentially cause millions of dollars in lawsuits. Leveraging a tool/platform that focuses solely on minimizing third-party risk can lead to improved workflows and staying on top of potential risk areas. It’s an essential first step in reducing claims and risk. Coupling that with proactive decision-making? Success.
Where do you begin the conversation about changing the approach? Start with the basics:
Optimizing your business’ workflows
Everyone talks about how beneficial optimized workflows are for all types of businesses, but what exactly does that mean? And more importantly, where do you start? Start with evaluating what you currently have and what you currently lack. Look at how they’re structured, who’s responsible for the execution, and the results you’re getting.
As a business with insureds, start looking at some basic “what if” scenarios: what would happen if one of your insureds gets hit with a $1 million claim? What would happen if a subcontractor falls on the job? Who should be responsible for informing on the risks and how will that happen? Are your teams (including your insureds’ teams) equipped with the right tools to ensure everything is where it’s supposed to be? All of these questions can help in building your business workflows and potentially save time and money down the line.
Something that worked 10 years ago when you were a 20 person team, or a 2 job operation, may not have aged well with your continued growth and expansion. Having to take on more responsibilities and inevitably, more risks, makes you realize that things need to change.
Make a plan and ask yourself some of these questions:
Get together with your team and lay out a process for handling claims for when they come through. These workflows should be looked at as a constant work in progress and never considered a final plan that doesn’t need further review. As new or potential risks come to light, amend your workflows and make them work for you, and streamline where you can.
Understanding risk profiles
Similar to optimizing your workflows, brokers, agencies, and insureds can benefit from having a deep knowledge of all aspects of their business. Gaining a better understanding of risk profiles may sound daunting, and it might be, but it doesn’t have to be wholly consuming. Whether you’re a broker needing a better understanding of your insureds’ profiles, or you’re an insured evaluating exposure related to third parties you work with, understanding your risk is a great place to start. Appropriately assessing risks and creating risk profiles of all involved insureds and 3rd parties will help develop a full risk profile. Take a look at past scenarios that cost you money or those that saved you money. What went wrong? What went right?
Insureds…not “one size fits all”
Leveraging your internal teams can aid you in understanding exactly how much you know. Nobody knows your business better than you, so why not use that to your advantage? There is no one type of risk; risks change by company, industry, size, geography, and so much more. Something that works for one will most likely not work for the other. Each line of coverage will be different and a blanketed approach will not suffice for each profile. If you’re working with a broker, perform the due diligence necessary to understand the differences and apply the appropriate amount of coverage for that profile.
Let’s take the next step
Lately, it seems that the world is changing while new technology and innovations are being released by the hour. In the insurance world, companies of all types are beginning to innovate for prevention. Technology like Gamification, wearable tech, and fleet management tech are helping to minimize the end cost of potential claims, or prevent them altogether.
Brokers, know your competition
How well do you know your competitors in the market? And not just what they provide, but how they provide it. Nobody wants to lose business to the big players, so why not stay informed of what they’re doing?
Understanding how your competition is handling their workflows and building their risk profiles can give you the advantage. Nobody wants to be blindsided when your biggest competitor comes to market tomorrow with something new. Ensure you’re doing everything in your power to recognize the changes taken by companies similar to your own. Do the research to figure out how to make that work for you.
If the ever-changing landscape of insurance has taught us anything it’s that everything ebbs and flows. If you can’t adapt to the changes you will end up losing relationships with long-standing clients or opening yourself up to unanticipated risk and potential claims. Whether you’re starting from scratch or reevaluating your business it doesn’t matter where you start, just that you do. Looking inwardly at the foundation of your business is essential for success in all other aspects. Making things work better for you and your team, having a full understanding of all clients and insureds in your portfolio, and getting ahead of the competition are just the basics. And it doesn’t have to all be on you. Outsource where you can to make it work for your end goals.