Tech Can Boost Self-Insured Success

Organizations in search of more affordable insurance coverage and improved profitability are reaching out to the captive market.

Self-insurance makes sense in todays business climate due to the hardening insurance market, changes in legislation, and the benefits of direct access to reinsurance markets.

But with inherent risks falling between the top and the bottom line, more is at stake than ever for self-insureds, making technology a valuable risk management tool.

Most captives, for example, dont have internal loss-prevention capabilities. However, various tech tools can help compensate for such shortcomings.

For example, the former cut-and-dried concept of buying property insurance based on building construction and fire protection is now a high-stakes process of not only securing broader protection for physical facilities, but also safeguarding the income stream those facilities can generate via business interruption coverage.

Having critical data at the ready–pertinent to the evaluation of vulnerabilities and capabilities of managing risk–will aid immeasurably in the marketing of any risk in a captive.

For a company following the traditional insure-and-control model, understanding the extent of your exposure has always been critical.

For the captive, whose insured is retaining a greater amount of risk, the distance is shorter and the correlation more immediate between controlling loss and the firm’s financial and earning ability.

Having Web-based tools that make timely information available anytime–by offering the ability to download data and print reports for presentations–is playing an essential and leading role in strategic risk management for self-insureds.

Approaches to using the Internet run the gamut from a basic storefront of Web page electronic brochures to high-end, personalized, interactive sites that provide services and solutions automatically.

The Internet, when used strategically, offers powerful, information-rich, communications-enabling technology to self-insureds. There are also online risk management tools available to aid in the monitoring, review and management of self-insured exposures.

Think of the technology as a dynamic electronic filing cabinet, a secured cache of critical corporate information that can be readily accessed, distributed and shared globally at any time.

Companion or complementary graphical analysis tools provide benchmarking, loss exposure analysis and interactive recommendation capabilities that a risk manager can use to sell the CFO on the idea of taking exposures in-house.

Information can be “rolled up” and aggregated for a comprehensive view of risk across the organization. “Drill down” capabilities identify actions to be implemented at a given location. Both could serve risk managers well in communicating and selling self-insurance options to their superiors, and monitoring the results.

Newer tools on the market tout expanded “information-rich” capture of outstanding and completed recommendations, property and business interruption values, loss estimates, construction and occupancy details, interdependency, and exposure information.

Merely identifying exposures and planning corrective measures is not enough. Knowing which exposures are critical and being able to conduct a detailed cost-benefit analysis to prioritize exposure reduction activities can make the difference.

The use of e-business tools to effectively gauge risk and focus loss control and prevention efforts for maximum effect are becoming more common among self-insureds.

Facility owners and risk managers, being held accountable for their contributions to the corporate bottom line, must be able to project the impact of recommendation completion and compare financial estimates of loss and costs of completion, as well as resulting loss-exposure completion.

Being able to quickly access data is essential for risk managers in exposure identification, prioritization, and the formation of cost-effective mitigation strategies, all critical factors in the success of any self-insurance initiative.

Mark R. Driscoll is a principal consultant with GE Global Asset Protection Services, an unbundled provider of global property loss prevention and business continuity solutions headquartered in New York City. He may be reached at mark.driscoll@gegapservices.com


Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, September 16, 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.