Changing Insurance Market Hits Some Companies Hard
The “soft” commercial insurance market that persisted from 2005 through 2011 lulled many Property and Casualty insurance buyers into believing that insurance would remain inexpensive and readily available. However, the market has shifted in the last year, and now many buyers are facing significant premium increases. For accounts with poor loss experience, finding insurers willing to cover them has become increasingly challenging.
You Can Do Something About Poor Loss Experience
As an insurance buyer, you may feel frustrated by pricing cycles that seem beyond your control. Yet, it’s essential to focus on what you can influence. Safety and loss prevention play a critical role in improving your loss experience, resulting in more affordable premiums and offering you more coverage options during “hard” markets. Over time, your insurance costs are largely driven by your loss history, making it crucial to minimize preventable losses as a way to reduce your cost of risk.
Key Statistics on the Cost of Frequent Losses
Frequent losses cost more than you may realize. According to the American Society of Safety Engineers, indirect costs can be 20 times greater than direct costs. Indirect costs may include:
- Accident investigations
- Training and compensating replacement workers
- Scheduling delays
- Lost productivity
- Administrative expenses
- Low employee morale
- Increased absenteeism
- Strained customer and community relations.
Risk and Safety Management Steps to Improve Loss Experience
There are actionable steps your company can take to recover from a poor loss experience. At PSA, we partner with a private firm of experienced safety professionals who implement a proven safety management system. These experts are skilled at addressing loss issues and embedding safety practices at the frontline level, one of the most challenging aspects of ensuring safety works in your favor. With a track record of reducing losses by up to 80%, these professionals have helped troubled companies turn around their loss experience. For our clients, PSA contributes a base amount toward these safety management services, and many clients choose to expand their engagement after recognizing its value.
In the short term, initiating a structured safety approach demonstrates to insurance carriers that you’re committed to loss prevention. It also shows your interest in reducing risk-taking behaviors and encouraging employees to take ownership of their safety. Collaborate with your insurance agent to ensure your current or potential carriers are aware of and give due credit for your safety efforts. In the long term, an improved loss profile can translate into substantial savings on insurance premiums.
Learn More About Safety Systems and Loss Control
If you’re interested in exploring how safety systems can impact loss control, please contact us, or email fgiachini@psafinancial.com.
Source: The American Society of Safety Engineer
