You can reduce your total cost of risk by utilizing a risk management process. To effectively manage total cost of casualty risk, businesses must look at a variety of cost elements.Speak to an insurance professional to tailor a comprehensive risk management and insurance strategy that addresses your objectives and protects your company assets, employees, stakeholders and customers.
The Rubin Group can evaluate the best way to address and modify your risks to change the likelihood and consequences of an event occurring to determine the types of strategies to implement and what insurance solutions are required to transfer certain risks.
Examining Risk Source
Casualty risk represents about 60% of a typical company’s total cost of risk, but can vary depending on several factors.
Calculating total cost of casualty risk normally involves considering five key elements:
- Retained loss.
- Claims management costs.
- Risk transfer premiums.
- Implied risk, or unexpected loss potential.
Examining the five elements will provide a strong starting point for calculating total cost of casualty risk. After calculation is completed, check specific cost drivers and prioritize where improvements or gains in efficiency can be realized.
Where Does the Reducing Come into Play?
Take these steps to reduce individual elements of total cost:
- Take advantage of loss projection models to project potential losses at different retention levels. Examining projected spits between retained losses and risk transfer, determines the most beneficial retention structure.
- Use analytics to evaluate claims outcomes, rather than judging third-party administrators on upfront fees only. Approximately 90 percent of workers’ compensation claims costs are variable, so comparing the transactional costs associated with claim and medical management addresses only a small fraction of your spending.
- Customize the risk profile to better position your company’s risk with underwriters. This will help to reach the core of issues instead of mask them. It is helpful to identify where your unique risks are coming from and reach the root of positioning for better control.
- Utilize analytical tools to negotiate paid loss credits to reduce insurer collateral requirements. These tools can be used together with a broader analysis of legacy claims. This step may help to release redundant collateral from past years.
- Pay attention to pre-loss mitigation and operational risk activities to reduce risk volatility and implied risk.
Example: Quality control programs that aim to identify and resolve product defects could assist in avoiding catastrophic casualty claims.
Throughout each step of the risk management process, including risk identification, transfer, retention, and mitigation; data and analytics are strong components. Using data, statistical modeling, and financial modeling in each step may help a business determine and monitor progress, and managing these costs more effectively.
About The Rubin Group
Based in New York, The Rubin Group provides insurance in most of the 50 states. Our full-service insurance brokerage provides insurance and risk management services to individuals in all income brackets and businesses of all sizes and types. We understand that every client has unique coverage requirements, and we are passionate about providing the ideal individualized coverage for each customer. Each member of our team takes the time to truly understand your situation, the particular risks you anticipate – and the very real risks you’ve not yet contemplated. For all of your insurance needs, contact us at The Rubin Group!