If you have never taken part in an insurance loss control or risk management meeting, it can be nerve-racking. Not knowing what to expect or feeling unprepared creates stress. I work in the insurance industry, and I can provide insight into what this process entails to help reduce any uncertainty you may have going into your first meeting.
I am a Senior Loss Control Specialist for an insurance company in the transportation industry, and I have been in this role for going on three years. I conduct around ten of these meetings each month with a variety of transportation companies, so I have conducted hundreds of these visits over the last few years.
This post will discuss what a loss control meeting is and how to prepare for it.
What is a Loss Control or Risk Management Meeting?
A loss control visit is a meeting where a representative from the insurance company will evaluate the risks and exposures your company may have as an operation. Compliance with regulations and the company’s safety practices will also be evaluated. The goal for the insurance company is to better understand the businesses that they are underwriting, so they can help to ensure that a profit is made on the insurance premiums for the policies written.
I Already Met with My Insurance Broker, is This the Same Meeting?
This meeting can be similar, but it is not the same thing. The job of your insurance broker is to help identify what insurance coverage you need and to find an insurance company to place your business with. Your broker may conduct risk management meetings, but they are usually not as thorough as what the insurance company’s meeting will be.
Have a Positive View of These Meetings
When I meet with potential or existing insured accounts that have never had a risk management visit, the individuals with who I am meeting may fear that the meeting is just an audit where the loss control rep tears apart the company’s safety program. While some loss control reps could have this approach, many insurance companies treat these meetings as a collaborative process.
The goal of the insurance company is to be competitively priced when it comes to quoting insurance policies while also making a profit on the premiums collected. It is a misconception that insurance companies are just rolling in profits. This is not always the case.
A common goal for insurance companies is to make at least a few cents profit on every dollar of insurance premiums collected. This profit is invested to make more money and to also grow their money to be able to pay out future claims that may arise or claims that have ongoing costs which extend well past the current policy year.
There are many insurance companies that may have competitive prices but they sacrifice service in other areas such as loss control, underwriting, or claims management to make up for the loss of revenue. This often leads to a worse experience for the insureds as well as leading to the insurance company actually losing money on the policy. It is not uncommon for insurance companies to be paying out ten to twenty cents on every dollar of premium collected in order to pay expenses and claims.
This can lead to the insurance company getting out of certain lines of coverage, such as commercial auto liability, to ensure they do not go bankrupt.
Will My Policy Be Non-renewed Due to a Risk Management Meeting?
The short answer is no; the odds are small that you lose your insurance coverage due to a risk management meeting. Usually, prospective insureds with weak safety programs or significant exposures are weeded out well before ever obtaining insurance from a company that places a large emphasis on risk management.
If this is an initial risk management visit as part of receiving a quote, then it can result in higher premiums or the underwriting department not wanting to quote your business if significant unfavorable developments are identified.
If you already have insurance with the insurance company you are meeting with, they want to better understand your operation, exposures, and safety processes during these meetings. The loss control rep will often make recommendations to address any deficiencies in your program as well as provide advice and resources for how to do so.
In this case, the insurance company wants to see that progress is being made in your safety program year over year, not necessarily cancel your insurance.
The Benefits of Being Insured by a Company that Emphasizes Risk Management
Choosing commercial insurance coverage solely based on price can be a poor short-sighted decision. If an insurance company is spending resources on loss control, or risk management services, they are usually more effective when it comes to accurately quoting insurance coverage. They tend to offer better customer service throughout the policy year as well.
Having coverage with a stable insurance company leads to a better experience as an insured through predictable and consistent service.
Loss Control Services
If this meeting is part of the process to get a quote from the insurance company, then it will be more of a fact-finding audit so that they understand the exposures your company has and what best practices are in place to mitigate the risk of losses occurring.
Once a business becomes an insured account, these insurance companies will often offer ongoing risk management services to insureds that are paying a certain level of premium each year. These services can include having a dedicated loss control rep that visits your company on an annual basis as well as other resources to assist you in reducing your risk for losses to occur.
The areas noted as deficient or needing improvement are areas that the loss control rep feels that, if addressed, can assist you in preventing losses, reducing the costs of claims, or reducing liability in the event of litigation.
Insurance companies will often provide free training resources, subsidies on third-party services, assistance with complying with regulations, etc., to assist your company with being more profitable from a loss perspective.
Make the Most of the Relationship
My goal as a loss control rep is to improve the insured’s safety program whether they stay an insured of ours the next policy year or not. I want to not only understand the operation and the exposures to improve our underwriting on the account, but to also be a resource (and value add) to our clients.
If a client greatly improves their safety program to become a more favorable company to insure, and it results in them getting a better quote the next year from another insurance company, then I am happy for them.
I, of course, want my company to retain favorable business. I hope that my company remains competitive in the market and we retain business through fair pricing and excellent customer service.
What Will the Loss Control Specialist Review During the Meeting?
The items that will be reviewed during this meeting will vary greatly. A significant driver in what is reviewed is what lines of coverage the insurance company will be quoting a price on. This meeting will also greatly depend on the insurance company’s approach towards risk management.
Some companies will not even request one of these meetings, and others will spend four hours with you walking step-by-step through every item imaginable as it relates to the coverages you are getting a quote on.
An Example of What a Loss Control Meeting Could Entail
Let’s say your company is a manufacturer of chemicals with plant employees and a trucking fleet that transports the chemicals to end customers. The insurance company is quoting your company for auto liability coverage, workers compensation coverage, commercial property insurance, and general liability coverage.
We will also assume the insurance company puts a significant emphasis on the risk management process, so the meeting will be thorough.
The Significant Exposures that the Insurance Company Has to Consider in This Example
Below are some examples of what exposures the insurance company will want to understand in-depth. This is by no means an exhaustive list of what is important or what an insurance company is concerned with when it comes to evaluating exposures.
Evaluating a Company’s Safety Program
If the insurance company is thorough in its loss control review, they will also want to understand what steps or mitigation actions a company has in place to mitigate the risks for losses to occur. Generally, the larger the exposure, the importance of mitigation actions increases.
Each line of coverage below also includes a list of safety practices or mitigation actions an insurance company may inquire about or evaluate.
Workers Compensation Exposures
Injuries are the primary concern of insurance companies when covering a company for workers compensation. From an exposure perspective, they will want to understand factors such as:
- How many employees are there
- What types of job positions are there
- What hazards are employees exposed to. I.e., Can the work result in severe injury and death? Are employees exposed to hazardous chemicals? Does the work put the employees at risk for musculoskeletal disorders
- Is there a risk for workplace violence to occur
- How many employees complete these hazardous work tasks
- How old is the average employee
Worker Compensation Best Practices That Could Be Evaluated
- Do new hires complete a physical abilities test
- Are hazard assessments or job safety analyses completed
- Are workplace inspections completed
- What does the safety training program entail
- Is there an injury and illness prevention plan in place
- What best practices are in place to manage worker compensation claims
- Is there a root cause analysis process in place
- Is there a safety communication program in place
- Is the company compliant with applicable OSHA regulations
Auto Liability Exposures
Auto accidents are the primary concern of insurance companies when covering a company for auto liability or auto physical damage. From an exposure perspective, they will want to understand factors such as:
- How many trucks are in the fleet
- What types of equipment are being used
- What is being hauled and what are the common commodities being hauled
- What are the common lanes of travel
- What is the average age, experience, and tenure in the driver pool
Auto Liability Best Practices That Could Be Evaluated
- What hiring guidelines does the company have in place for hiring drivers
- What does the driver training program entail
- What safety equipment is installed on the tractors and trailers
- What best practices are in place to manage auto loss claims
- What are the company’s CSA scores (if subject to the FMCSRs)
- Is the drug and alcohol testing program in compliance with the regulations (if subject to the FMCSRs)
- Are the driver qualification/ investigation files in compliance (if subject to the FMCSRs)
- What does the vehicle maintenance program entail? Is it in compliance (if subject to the FMCSRs)
Property Damage Exposures
Property loss is the primary concern of insurance companies when covering a company for property damage. From an exposure perspective, they will want to understand factors such as:
- The type of facilities
- The risks for fires, explosions, water damage, etc.
- The risks created by natural disasters
- What property, equipment, chemicals, materials, etc., are stored onsite
- The value of the building and its contents
- The neighboring properties and what risks are created for the insured business due to these operations
Property Damage Best Practices That Could Be Evaluated
- Spill response plans
- Emergency management plans
- Chemical management program
- Workplace inspection process
- Fire prevention program
- Workplace organization and storage practices
General Liability Exposures
The general liability exposures can vary greatly from operation to operation. For many companies, this policy is inexpensive when compared to other lines due to less risk for loss to occur. From an exposure perspective, they will want to understand factors such as:
- Are there visitors, customers, or other third parties that frequent the company’s property
- Are there risks for fuel spills or chemical releases
In our example, let’s assume there are no third parties that frequent the company’s properties. An exposure that would be of concern when it comes to the general liability for this policy could be chemical releases or spills that could impact the surrounding community or water resources.
General Liability Best Practices That Could Be Evaluated
- Spill response plans
- Chemical management program
- Workplace inspection process
- Visitor/ vendor management process
- Security cameras, security lighting, and physical barriers
Preparing for the Loss Control Meeting
Now that you have an understanding of what exposures and best practices an insurance company may look at, you can begin to prepare for the meeting. Before preparing a thousand documents, reach out to the loss control representative to get a better understanding of what to expect.
If the loss control representative has not sent you an overview of the visit or what to prepare, simply email them asking for additional details.
The scope of their visit may be minimal compared to the list provided above. If the visit is going to be thorough, below are some tips to be more prepared:
- Do not stress this meeting. As stated above, both you as the insured and the insurance company, have a vested interest in understanding the exposures for losses, best practices that are in place, and any deficiencies that may be present.
- Be honest. There is no point in lying about exposures or exaggerating about what best practices are in place. If the loss control rep is thorough, they will identify any inconsistencies of what is being said and what is actually occurring. The loss control rep needs to understand the operation so they can accurately identify deficiencies and provide assistance to address them.
- Ensure you have access to documents they may request. Examples include OSHA logs, training files, vehicle maintenance files, written policies, driver list, vehicle list, employee list, inspection forms, etc.
- Ensure other key personnel are available during the time of the visit. If you only handle a specific part of the company’s operations or safety program, then other personnel may have to be present for part of the meeting to ensure the necessary information is obtained.
These meetings are nothing to stress over. Hopefully, the loss control rep and the insurance company you are meeting with have a collaborative relationship regarding risk management with their insureds.
Regardless, this process is normally very informative, and all parties can learn a lot from what is discussed. If the insurance company offers risk management services, take full advantage of these services. It is part of the premiums you pay and will help you improve your safety program.
If you take steps to address the recommendations made as a result of these meetings, you will most likely help your company reduce the cost of losses over time. Doing so will also help you obtain more favorable quotes in the future for the insurance you need.
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