When was the last time your agent or broker asked you toconsider the total cost of risk? If you are like many insurancebuyers, you're hearing and thinking about this concept more thanever before.

Indeed, a new survey commissioned by Wausau Insurance found thatinsurance buyers see increasing value from reducing their totalcost of risk across multiple lines of commercial insurance.

Eighty-one percent of commercial insurance buyers (up from 70percent last year) said they save at least $1 in lost productivityexpenses for every $1 saved by reducing workers' compensation claimexpenses. Three-fourths (up from 60 percent) said they save atleast $1 in lost productivity expenses (and related uncovered lossof value) for each $1 saved by reducing claim costs for generalliability, property and commercial auto lines.

Why is this important? Because the pressure has never beengreater to prove the bottom-line value of a risk management programto company brass. Insurance buyers need to be cognizant of the truevalue they get for their insurance coverage, both the direct costof the policy as well as the indirect costs of claims.

An independent survey of 200 financial executives–the secondannual “Wausau Multiline Productivity Poll”–was conducted byBoston-based market research firm Atlantic Research &Consulting. A similar sample of financial executives, frompredominately midsized companies, was polled a year ago on many ofthe same questions.

More than two-thirds said their agent or broker “always orusually” counsels them to consider the total cost of risk, inaddition to the direct cost of premiums and deductibles, whenconsidering property-casualty coverages. Another 18 percent saidtheir agent or broker “sometimes” counsels them to consider thetotal cost of risk.

Most survey respondents said they save at least $2 in lostproductivity expenses for every $1 saved by reducing claim expensesfor all four lines. For the second straight year, respondents saidthey get somewhat higher lost productivity savings from workers'comp than from the other three lines, although the gap isnarrowing.

The survey findings for workers' comp seem generally consistentwith various industry estimates. However, there has beencomparatively little industry focus on the potential indirect costs(lost productivity and related uncovered loss of value) of claimsfor property, general liability and commercial auto.

The perception that there are greater productivity savings fromworkers' comp may underestimate the potential of other types ofclaims, and we're finding that midsized employers are becoming moreaware.

We need to expand the focus beyond workers' comp, for whichdirect claim costs are merely the tip of the total cost “iceberg.”A similar analogy may apply to other lines once the ultimatecost–and uncovered loss of value from those claims–becomes moreclearly understood.

Consider some related, significant findings in the survey:

o For the second year in a row, executives from upper midsizedcompanies (more than 500 employees) report much higher indirectsavings by reducing claim costs in all lines than executives fromlower midsized companies (between 100-500 employees).

o About 70 percent of respondents have combined at least twolines of commercial insurance with one carrier, although amongemployers with more than 500 employees, the percentage was muchhigher in both annual surveys.

o Nearly 60 percent of insurance buyers said their agent orbroker “always or usually” encourages them to place multiple linesof coverage with one carrier, with another 30 percent saying theiragent or broker “sometimes” provides such counsel.

o Among those who have combined at least two lines of coveragewith one carrier, nearly 90 percent in both annual surveys saidthey achieved significant efficiencies (saving at least 4 percentper year).

The bottom line is that insurance buyers, with the help of theiragents or brokers, are gaining a more sophisticated view of thecost of risk, as well as the full potential savings fromeffectively controlling claim costs across all lines of commercialinsurance.