Reduce Claims and Costs by Optimizing Your Risk Control

NOVEMBER 4, 2024

Effective risk control is critical for reducing the significant costs associated with the multitude of exposures organizations face. When properly implemented, risk control measures not only protect employees and customers, but also lead to a direct reduction in overall risk, claim frequency and insurance premiums. USI has found that a targeted risk management process focused on reducing or eliminating claims and cost drivers can result in premium reductions of up to 30%.

However, to achieve these results, risk control must be targeted, measurable, and ongoing. Targeting the specific risks unique to an organization’s operations ensures that resources are allocated efficiently, while regular measurement and updates to risk control strategies keep the process dynamic and responsive to new challenges.

Claims are symptoms of underlying problems. Fortunately, the quality and number of solutions to address these issues are better than ever. It’s critical to utilize the right broker and tools offered by insurance companies, as well as the next-generation technology and resources offered by third-party organizations. This approach can help you achieve maximum claims reduction and cost savings.

Six Steps to Better Risk Control

While the insurance industry has made some improvements to loss trending in an effort to guide targeted risk mitigation, many insureds have difficulty accessing comprehensive loss data. The industry continues to adapt slowly to evolving loss trends by offering traditional, antiquated solutions in a disjointed manner.

At USI, we help clients optimize risk control by assisting with the development of an end-to-end risk mitigation plan. This starts with an analysis of industry exposures and ends with the selection and quantification of solutions and providers that offer the highest ROI. Following are steps to help you evaluate data and implement more effective risk control:

1. Start with your industry and your data. Do not accept generalized claims data. If you manufacture a product, do not look at claims data for a fast-food restaurant, which will be irrelevant for your unique exposures.
2. Examine the lines of coverage that drive your claims costs. Narrow your loss analysis to allow for a more focused and impactful approach.
3. Determine the top loss drivers that impact your organization and industry for each of these lines of coverage.
4. Identify the best solutions available to prevent and mitigate these losses. Determining which options are right for your unique situation can be challenging, but this step is critical.
5. Determine where to invest your limited time and dollars based on the potential return on investment (ROI) of every solution under consideration.
6. Leverage the right partners to effectively implement the selected solution(s), including insurance brokers, carriers, third-party vendors, and emerging technology solutions. This step can be overwhelming, given the wide range of solutions that are constantly evolving. Remember that informed decisions can greatly impact claims and costs. In USI’s experience, a curated group of third-party providers offer more than a thousand solutions, and 86% of these solutions include multiple product options. Today, finding the right partners and resources is a critical part of successful risk management.