Teaming Up For Service: Agents, Insurers Offering RiskControl For Customers

Imagine youre the owner of a mid-sized manufacturing company andyou get a call from your insurance agent telling you your insurancecarriers risk control consultant would like to make a visit to yourfacilities.

If you havent experienced such a visit, you may beapprehensive.

However, it is a visit the owner should look forward to becauseit can be a valuable service provided by the agent and insurancecompany.

Manufacturing firms face many risks in their operations. Whenagents team up with their carriers risk control consultant, thecombination can mitigate many of these risks and create a cultureof safety in the workplace.

Agents and insurance company risk control experts often play therole of “risk manager” for their customers. But sometimes,customers dont fully understand this role or how a partnershipbetween the client, agent and insurance risk control consultant canhave a positive influence on the companys bottom line.

Typically, the risk managers role is to know the “ins” and“outs” of his or her organization, determine potential hazards, andensure that the plan for addressing these hazards aligns with theorganizations overall business strategy. But many mid-sizecompanies cant afford the luxury of having a risk manager on staff.If they do have a designated risk manager, this person often servesa variety of functions within the organization. Mitigating risk isnot his or her primary function.

In these situations, the agent often serves as the common linkbetween the customer and the carrier. So it is imperative thatagents and brokers know how to work effectively with the insurersrisk control experts and customers to make the risk assessmentprocess as productive and beneficial as possible.

Most agents understand that partnering with insurance carriersto provide risk assessment services is an important way to attractand retain clients. These agents know their self-interests are bestserved when their clients needs are met. Thats good customerservice.

Good customer service will go a long way toward establishingtrust and strengthening existing relationships with clients. Afterall, the market will eventually soften, and both agents andinsurance carriers have vested interests in establishinglong-lasting relationships with their customers by providingexceptional service across the board.

The best way agents can provide this service is to establish aspirit of teamwork between the agency, carriers and customers inorder to develop working partnerships among all the differentparties.

In any partnership, the key to success is good communication.Clearly establishing the common objective–to minimize lossexposure–and then staying focused on the end goal, will not onlymake the risk management process beneficial for the client, butwill also help get everyone to buy in to the process. Once everyoneis invested, its time to develop a plan for mitigating risktogether.

In essence, everyone has a specific role. Independent agents andbrokers are not expected to serve as a substitute for a riskmanager. But in the absence of one, agents and brokers can helptheir clients identify, minimize and cover their risks.

Risk control experts work closely with both the agent and theclient as a team to identify the greatest property and generalliability risks, as well as other risks for major disruptions tothe clients business. Together the team can analyze potential risksand ensure the benefits of any recommendation will outweigh thecosts.

For example, a risk control team reviewed the losses in amanufacturing companys fleet of delivery trucks. The reviewrevealed that nearly 40 percent of accidents involving this clientsdelivery trucks happened at one location.

An examination of this accident site turned up some interestinginformation. The location had a particular turn that hadsignificantly poor visibility for drivers. This turn seemed to bethe root of the companys mishaps.

The solution was to reroute the delivery trucks to make the turna mile down the road, where there was not a visibility issue. Thenumber of accidents decreased substantially, providing savings toboth the carrier and the customer.

This is a great example of how analyzing a risk revealed asimple solution that would not only save the client money in thefuture, but, more important, would improve safety and could evensave lives.

Another case involved a food manufacturer. The client was facingbig increases in premiums because one phase of the manufacturingprocess was exposed to high flames. By investing in a firesuppression system over the limited area of the exposure, themanufacturer was able to get a reduction in its property insurancerates.

The decrease in the property insurance premium paid for the costof the fire suppression system in less than two years. A major firewould have cost the company more than twice the cost of thesuppression system in lost income.

Which brings up another issue. A major business disruption canoften have dire financial consequences for mid-size companies. Somemay never be able to recover from the loss of income.

A way to guard against such losses is to instill accountabilityfor safety issues throughout the entire organization.

The agent and risk control expert can play important roles inhelping their clients create cultures of safety. Clients who do anexcellent job of managing risk will include safety as part of thejob performance and foster environments where safety and efficiencygo hand-in-hand.

Mitigating risk can be a beneficial experience for customers,agents and insurance carriers if some basic guidelines arefollowed:

Develop a partnership among the agent, customer and carriersrisk control expert.

Communicate clearly and establish the common goal from thebeginning. If everyone is invested, the likelihood for success ismuch greater.

Jointly devise a plan and stay focused on the big picture: tomitigate risks and improve safety.

Clearly determine everyones role and then execute the plan.

By staying focused on the big picture, risk control andindependent agents can team up to deliver great customer servicethat will go a long way toward building customer loyalty andlong-lasting relationships.

Jeff Fancher is assistant vice president of Commercial RiskControl at The St. Paul Companies, St. Paul, Minn., and Eric Turneris vice president of Marketing at Molton, Allen & Williams, anindependent insurance agency in Birmingham, Ala.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, June 30, 2003.Copyright 2003 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.