Do you want to reduce your insurance costs? Invest in Risk Management
Sep 19, 2011
Insurance, Risk Management and Health & Safety activities are often perceived to be a necessary evil, and an expense that drains the business without putting anything back in. It’s easy to see why as many businesses spend a large amount of time and money producing Risk Assessments & other documentary evidence to comply with legislation with little obvious reward.
There are, however, a number of very serious reasons for carrying out such work and, in time, your business could reap the rewards of this activity and expenditure. The obvious reason is a legal one, as all businesses should be carrying out Risk Assessments on their activities, training staff, carrying out inspections etc. Whilst technically some of this work only needs to be carried out if you have 5 or more employees in reality everyone involved with the public should be included in such activity.
If a serious incident occurs on your park or at your dealership the authorities, and indeed your insurers, will wish to see the risk assessments you have carried out on that area of the business, regardless of how many employees you have. If you don’t have such assessments or records in place then you and the business could be liable for prosecution and this could ultimately impact on the business financially in the form of a fine.
In addition your insurers will require such information in order to help them defend any claim which may come in from the third party. If they are able to do this then this will impact on your insurance claims experience.
Therefore, there are three reasons why what, on the face of it, seems to be a drain on the business could actually help to maintain or increase the profitability of your business.
1. Reduce Accidents – a proactive approach to risk management should mean that your business sees a reduction in the frequency and severity of accidents.
2. Evidence for Defence - Having the necessary Risk Assessments, Inspection records or training records in place means that if the worst should happen the business can offer a defence to prosecution as it can evidence what it has being doing to avoid incidents. Therefore hopefully the business will avoid prosecution by the Health & Safety Executive and any subsequent fine.
3. Save Money - Insurance premiums are directly affected by your claims experience and insurers will generally be looking at your claims experience over the last 5 years. If you are having a number of liability claims or very large claims on your insurance your insurance premium is likely to rise accordingly and this could happen year on year if the claims continue to occur.
One other point to bear in mind is that insurance is cyclical. At the moment the market is very competitive and as such insurers are perhaps paying less attention to Risk Management work and also, to a certain extent, your claims experience.
David Moffat, Associate Director at Wilby Ltd, explains that this may not continue “It is anticipated that at some point in the future the insurance market will change from what is known as a soft market to a much harder market where premiums will start to rise and insurers will be paying much more attention to the Risk Management activities of their clients and rating accordingly.
If you wait for this change to occur before putting more effort into Risk Management then unfortunately you will be too late as insurers will be looking at your historic record and rating your insurance accordingly. If you start now or have been continually carrying out Pro Active Risk Management over a number of years your claims record should reflect this and therefore any impact rating increases may have on your business will be minimised and as such your Risk Management efforts will start to see a return on your investment.”
To get the benefit of this activity you must begin now as starting once and incident has occurred or the insurance market has changed will be too late and your bottom line profits could be hit hard. A good starting point for any business is to look at the checklist below.
H&S Compliance Checklist
1. Health & Safety Policy – This should include a policy statement signed by the most senior manager responsible for health & safety, and it should be reviewed and re-dated annually.
2. Risk Assessments – It is a mandatory requirement to assess risks in the workplace. Then, don’t just put them on the shelf, make employees aware of the significant findings and review them at least annually.
3. Training Records – All employees should receive the necessary training so that they can carry out their jobs safely. Remember to record training and have a policy for when refresher training is to be carried out.
4. Inspection Records – Keep records of pro-active inspections for checking the condition of public areas, cleanliness of showers and toilets, condition of machinery and vehicles etc. Delegate inspections to people responsible for that part of the business, make sure all inspections records are signed and dated and appoint someone in authority to check the inspection records.
5. Competent Advice – All employers must have competent advice so that they can run their business in a legally compliant manner. Ideally this competence should be within the business but appointing external consultants is an acceptable, and for many businesses the most cost effective alternative.
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