Insurance Friend or foe

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InsuranceFriend or foe?

• Mike Flannery FCII, CMIOSH, MIRM, ABCI

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Hey, arent we on the same side?

• Whose risk is it anyway?

How much?
The Eternal Triangle
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Whose risk is it anyway?

• The health and safety practitioners position

The insurance practitioners position
By whom should the organisation be guided?
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How much?

• Lack of understanding of insurance financial
  modelling

True costs of risk
The six steps to insurance heaven
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Lack of understanding of insurance financial
modelling

• Your premium may not reflect only your experience
  

Underwriters have targets too!
The intermediary dimension
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True costs of risk
Your effort expended
Risk management work
you do
Premium you pay
Total costs expended on managing risk
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Six steps to insurance heaven

• Identify the risk in question

Measure the impact of the risk
Eliminate the risk
If not, reduce the risk to the lowest level that
is reasonably practicable
If you can afford to, accept the residual risk
If you cannot afford to, transfer the residual
risk
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The Eternal Triangle

• The Insurer

Q. Is it in the insurers interest for you not to
have claims?
The Intermediary
Q. Is it in the intermediarys interest for you
not to have claims?
The Insured
Q. Is it in your interest for you not to have
claims?
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Actually, insurance is really cool!

• Insurances rightful place

Leveraging your knowledge and experience
The real relationships
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Insurances rightful place

• Legal or regulatory requirement

The loss would be catastrophic
Below the waterline
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Leveraging your knowledge and experience

• Normally the only person who has sat exams in
• managing risk

Usually the only person with a structured process
Typically, cross-functional
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5 things an underwriter likes to know

• 1. There is someone is in charge

2. There is a solid Risk Management infrastructure
3. Evidence of work
4. Year on year improvement in the risk experience
5. Action plans for the future
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The real relationships

• The insurance relationship

The risk relationship
The information relationship
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The insurance relationship

• When do your insurances fall due for renewal?
• Are they all on the same date or spread?

Who is your intermediary?

Name, Tel. No., e-mail address MEET THEM!
Who is your insurer?
Insurance risk register, Underwriter
MEET THEM!
What is the experience of your policies?
What are the claims? Which policies? - Last
three years
Always remember, with insurance, less is more
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The risk relationship

• What is your organisations relationship with
  risk

Plotting your appetite for risk
Working out your OUCH factor
Including all your risks
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What is your organisations relationship with risk

• Who drives your organisations position?

Who decides the point of transfer?
What structure or process was used to decide the
point of transfer?
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Plotting your appetite for risk
Risk aware
Risk averse
Risk accept
Risk Blind
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Working out your OUCH! factor

• This is a collective board-only decision

This is a financially-based decision, not an
insurance claims experience-based decision
Should always be set as high as is bearable
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Include all your risks

• In the risk profiling exercise include all risks,
  not just
• those ones for which you have traditionally
  purchased
• insurance

Your ability to bear risk is always greater where
insurance is available
Risk profiling is an ongoing process
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The information relationship

• Are you collecting the right sort of information?
  

Have you established nominal costs?
Build the real picture of your organisation
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Are you collecting the right sort of information?

Making the unseen, seen.

• Different organisations, different information.

Financially-based information
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Nominal Costs

• This requires board agreement

Differentiate between employee levels
Include all three parts in the figures - Wages/S
alary - Administration/production - Profit
margin
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Building an accurate picture

• Agree on the presentation format and style

Present to the whole board
Dont be alarmist. The figures will sell
themselves
Include an Action Plan
Obtain at least verbal sign-off at each stage
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And finally

• The organisation has to become aware of its own
  risks

The organisation has to accept responsibility for
them
The more the organisation manages them, the less
they will pay. In every way.