Brokers To The Rescue: Loss Control Can Save Clients

Americas businesses, nonprofits and apartment buildings are safer than ever, but still not safe enough. There are still too many fires, slips-and-falls, motor-vehicle accidents and workplace injuries.

Fire, a killer since humans first began erecting buildings, continues to cause devastating property losses and deaths. Organizations of all types and sizes–from the city homeless shelter to the local bank to the Fortune 500 company–continue to need loss control and safety engineering to combat these perils.

Insurance brokers with a loss control department staffed by qualified professionals are in a great position to meet this need. Today, it's no longer enough for brokerages to just place insurance for clients; they also need to be helping them prevent losses and control insurance costs. Loss control completes the brokers service offering. Its a necessary part of a proactive risk management program.

Providing loss control services benefits both the client and the broker. Some of the key benefits follow.

Insurers inspect properties primarily to protect themselves and reduce their risks. If the insurers inspector finds a significant problem, the customer could face non-renewal of the policy or greatly increased premiums.

A brokers loss control reports are confidential–they go to the client, not the insurance company. This gives the client the chance to correct safety deficiencies before they cause big insurance problems.

Additionally, the brokers loss control experts can serve as a clients advocate. For instance, an insurer once told one of our clients that it had to install sprinklers in its headquarters–a historic building. That would have been costly and damaging. Our loss control experts developed a less expensive and intrusive way to solve the problem.

They spoke as engineer-to-engineer with the insurers loss control staff and demonstrated that the solution would work. The client was able to save money and improve fire safety.

A brokerages loss control staff can even help a client planning to buy a building. They can inspect the building before a purchase and let the client know if safety problems are discovered that might be expensive to remedy. Where else can a business get this kind of service?

Today, many insurers outsource inspections to a consulting firm, which does the inspection and sends the report to the insurer. The insurer uses the report for underwriting and pricing.

While this meets the insurers needs, there may not be much if any follow-up with the client, who may not get additional information or guidance on how to solve the problem. This isnt surprising, because the consultant is paid by the insurer, not the insured.

Since the report is written for specialists, it may not be that meaningful to the client. The technical verbiage alone may not project the true problem, since the words can be misconstrued.

A brokers in-house loss control department doesnt just e-mail its report to the client and leave it at that. To close the loop, the representative goes over the report with the client and explains its meaning and the reasons behind the inspection. Priorities are discussed and recommended made with an eye also on remediation efforts.

Insurers, on the other hand, may follow a rigid format in their loss control reporting. For instance, they may produce and disseminate reports on a set schedule, and the client might not find out about a problem for months.

Brokers, being smaller and more flexible, are in a better position to customize a program. For instance, some businesses need constant service. The brokers loss control staff might arrange for access to the clients intranet.

Loss control representatives can submit reports and digital photos through the intranet. If an emergency situation arises, reports can be filed within 24 hours and remediation started within 48 hours.

Big companies and institutions usually receive the loss control services they need, whether from the insurer, the broker, their own in-house staff, or a combination of the three. Medium-sized organizations often dont get the level of services they need–their need is often greater because they dont have a full-time safety professional on staff.

Furthermore, insurers and the big brokerage houses are geared toward providing loss control services to big companies, while independent brokerages can afford to provide loss control services to smaller organizations.

Since loss control is both a sales and a client-retention tool for these brokers, its in their interest to provide it to the broadest possible range of clients.

Today, more businesses are placing their insurance with captives and offshore insurers, neither of which normally provides loss control services. In such cases, the broker is the logical source for this service.

The bottom line is that clients that receive loss control services–and implement the recommendations–have safer environments, with fewer injuries to employees and customers, improved morale, and lower long-term insurance costs.

By working closely with their loss control experts, insurance professionals gain a fuller understanding of the account and are thus better able to insure the company and represent it in the marketplace.

The loss control specialists may uncover exposures that neither the client nor the broker noticed. If the risk is an extraordinarily clean one, the loss control reports give the broker more ammunition to negotiate the best possible rate in the marketplace.

Loss control isnt for every commercial lines broker. Staffing a loss control division with qualified professionals is expensive and not a step to be taken lightly.

For the brokerage that has the right clientele and is fully committed to loss control, however, the service is a key one that distinguishes it from the competition and adds great value to the service it provides clients.

Its also a service for which there will be increasing demand in the years ahead.

John Baker, a veteran loss control specialist, is director of technical services at Bowman Specialty Services, LLC, a loss control and safety-engineering firm that is a division of E.G. Bowman Company Inc. in New York City. Broker Jacqueline Forster is vice president, sales, with E.G. Bowman Company, and senior vice president with Bowman Specialty Services. They can be reached at jbaker@egbowman.com and jforster@egbowman.com.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, August 12, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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Brokers To The Rescue: Loss Control Can Save Clients

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