The term “Risk Management Review” definitely has negative connotation associated with it. One bad experience sets the tone, and it may feel like the insurance company is “out to get you.”
Here’s how it typically goes: A loss control representative comes out with a loss run (list of previous insurance claims) that the contractor has had. The rep reviews the safety program, discusses the loss run and tours a jobsite. A few weeks later the contractor receives a laundry list of “recommendations”….but they’re not recommendations in the typical sense because the contractor is required to respond in writing whether or not it will be complying with the recommendations. It would be fair to rename this list of “insurance sanctions,” since a company’s failure to comply can lead to increased rates, non-renewal or decision not to quote.
It is important for contractors to understand why they’re being reviewed in the first place. The insurance carriers want to be certain that the company is taking appropriate actions to prevent injuries and property damage. This report is submitted to the carrier’s underwriter and can influence pricing by up to 10 percent.
Steps contractors can take to ensure a successful review
Get a detailed list of what will be reviewed prior to the onsite visit.
- Gather necessary information such as safety manuals, list of owned autos, list of properties, operating procedures, financial statements, etc.
- Tie up any loose ends before the review.
- For property reviews, make sure fire extinguishers & sprinklers are installed/inspected/maintained – have copies of records. Also, clean up the jobsite. Whether it’s the shop or a jobsite, cleanliness reduces several risk factors and will shine a better light on the review.
- For auto reviews, make sure trucks & trailers are DOT compliant and up to date on safety lane inspections. If maintaining internally, make sure mechanics have necessary certifications.
- For workers compensation reviews, make sure there are a few formal, written programs including return to work, new hire orientation, ongoing employee training and procedures for reporting incidents.
- Use this opportunity to showcase efforts and progress towards fewer injuries and explain hurdles the organization has overcome.
- Talk big about the company’s safety program’s successes.
- If there have been injuries/losses, turn them into toolbox talks (teachable moments) for all other employees to learn from.
- Have a specific countermeasure in place for every loss on the lossrun.
- Accompany the loss control rep on any site visits.
- Ensure that they’re seeing “typical operations.”
- If something is observed that requires attention, address it immediately.
- Don’t try to hide anything from the carrier. If the insurer is expected to pay claims, the company will need a good, trustworthy relationship with the carrier.
- Ask for some resources from the carrier. It shows interest in a proactive approach to risk management. Also, the carriers appreciate when clients utilize their resources. Most carriers are looking to differentiate themselves from other carriers with these resources. If a contractor is receiving the deliverable vs the one having to provide it, it’s to the contractor’s benefit.
- If there are open claims, or if there is a fair volume of claims annually, request the carrier to begin conducting formal claim reviews. This process keeps the contractor and the carrier on the same page regarding claim status. Setting up a recurring quarterly or monthly review demonstrates the contractors’ commitment and can save money by expediting claim closures.
- Finally, if a few recommendations do come out after the review, address them immediately. Respond to the carrier in writing and identify what the company intends to do to satisfy each recommendation.
