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 wisThere 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 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.
