Cut a dollar; save a dollar. If it were only so straightforward, right?
In business, many “costs” should be more accurately viewed as “investments.” With regard to insurance and risk management, it’s important to remember that savings can’t be measured strictly by changes in premium levels paid. Business risk is far too complicated for such a simple equation. Instead, you must evaluate your overall approach to assess not only the cost, but also the possible savings long-term.
Of course, the biggest savings can come from avoiding claims in the first place. Unfortunately, it’s difficult, if not impossible, to fully quantify the financial benefits of many risk management tactics. Let’s say you implement a new training program, install new safety equipment or make basic procedural changes that eliminate daily hazards for employees or customers. How many accidents did each help you avoid? How many mistakes were headed off at the pass?
While you’ll never know for certain, you can anticipate improved safety records or reduced claim levels leading to lower long term premiums. And don’t forget the additional possible benefits (which translate into long-term savings as well). This includes, among others: higher employee morale, greater productivity, improved corporate image, lower product defect rates, superior customer satisfaction ratings. Shows the powerful potential for any risk management solution to create a domino effect of positive outcomes.
And if you do have a claim? Nothing better than quick resolution and a speedy return to business-as-usual to save costs in the long run. Upgrading (or creating) your disaster recovery and business continuity plan would be a good investment of time.
So how do you know where to start? Well, I’d suggest starting with a broker, one who understands the importance of a balanced approach that relies on both prevention and protection-in other words, one who helps you avoid the claim in the first place, but makes sure you’re covered should one occur.
In the end, you should end up with a comprehensive program that doesn’t cut corners-because ultimately, that’s really the only way to cut costs. At MJ, we call this Creating Alignment: your insurance and risk management programs should align with your business goals to ensure success.
