If Insurance is the Flower, Is Loss Control the Weed?

flower beds

Insurance is a Good Thing

Insurance is an important part of business, providing enterprises options to pursue greater opportunities they would not have had without it and affording continuity when things go wrong, as they sometimes do. The insurance industry is in the business of managing risk and the field of Risk Management has sprung forth from it, much like flowers after a spring rain.

Risk Sources and Complexity Have Increased Over Time

As part of the Risk Management process, insurers field consulting specialists in loss prevention, who are concerned with identifying hazards and risks, and cost-effective alternatives and solutions.  These consultants may be in-house or outsourced and operate under a myriad of titles and designations, including, to name a few:

  • Accident Prevention
  • Loss Control Engineer
  • Loss Control Specialist
  • Loss Prevention
  • Risk Control Field Representative
  • Risk Engineer
  • Risk Manager
  • Safety Engineer

Depending on the nature of the operations, the loss consultant will “survey” or gather information in person or by phone, usually after an insurance policy goes into effect or when it renews. If the survey is in person, the loss consultant will set up a time that is most convenient for the insured, avoiding periods of high activity so not to disrupt operations, or low activity as vacation times and holidays.

The Loss Control Survey Process

Setting up the appointment is the first step of the loss control survey process, which consists of three core phases:

  1. Presurvey
  2. Survey
  3. Postsurvey

In the presurvey phase, the loss consultant should provide the insured with a brief listing of the information to be examined, such as: company safety programs, inspection forms, incident and accident investigations, and other records and documents as company policies and specific records.

The survey starts with an opening conference, a walk-through of any facility or a look at any vehicles present, a records/documents examination, and a closing conference. The purpose of the survey is not to find a list of deficiencies, but a factual review of safety and discussion of any hazards or potential hazards, why the situation is hazardous, and what can be done to improve safety. The loss consultant may discuss several recommendations to improve safety and various options to meet those recommendations.

The postsurvey phase should result in a formal, follow-up letter of recommendations and how the insured can make safety improvements. On occasion the loss consultant may schedule a follow-up visit regarding the recommendations.

Meanwhile, In The Real World . . .

Change is difficult. In the real world, you find people don’t like or want change. “We’ve always done it that way.” Complacency sets in.

“We see over and over where organizations start out really strong and have executive support, but then they don’t continue to steadily grow the risk management process at their organizations.” Steve Zawoyski PwC

Anyone working in loss control or risk management soon discovers the prevailing attitude that our job is to make life difficult. And the status quo can be mean and resourceful. Rather than seeing any added value, loss control becomes a weed, and like any noxious weed, people are constantly trying to kill it.

Tips for Better Loss Control/Risk Management 

  1. Communicate well. One of the most effective communication strategies is to listen more than you speak. But just because it’s effective, doesn’t mean we always do it or do it well. Clear communications save everyone time and money. Failure to communicate well is the root cause of many a misunderstanding.
  2. Ask your loss consultant questions. Why is this recommendation critical? What are some other alternatives? Are there any time constraints in following up?
  3. Be forthright. Nobody is perfect. Not meeting certain safety standards can always be fixed. But not fixing a possible safety issue is never a good long-term policy. Cutting back on safety efforts will not result in long term savings.
  4. It’s the little things that make a big difference. The key word in loss control is control. Small improvements over time add up. Take control over the safety improvement process.

Thank you for reading this.