A good business risk profile is key to effective insurance planning, says risk consultant Judith Harriss
“It is in your own best interests to dedicate significant attention to your business risk and the insurances you need to transfer your risk and minimise your losses,” Harriss says.
This is achieved by “preparing for the worst-case scenario and hoping for the best outcome”. “Be proactive, be assertive and ask for help – engage your own independent expert to demystify and support your insurance program,” she says.
With more than 30 years’ experience in the insurance industry – much of it spent with a large energy company and an Australian state-government transport agency – Harriss has seen all kinds of insurance arrangements.
The principal of consultancy firm Risk Balance says that one of the things she observes all too regularly is lack of contact between firms and their brokers.
“If you don’t see your broker at least three times a year, then you are not getting enough value out of them,” she says.
“They’ve got to be interested in your business; if they’re not, they are not doing their job or earning their commission.”
The right questions
Sydney-based Harriss says that it comes down to having sufficient understanding about insurance to ask the right questions of both the broker and insurer. This is where the services of someone like her come into play.
“As an independent insurance advisor, I like to educate and then facilitate the insurance process and add value to the business by transferring insurable risks to an insurer that offers the best coverage at the right rate,” she says.
She does this by asking questions… lots of them. “I want to know what your business does, how it works, what you think are the good and not so good happenings, what makes you not sleep at night,” she explains.
Risk transfer, when aligned correctly to a business risk profile, maximises insurance parity in the areas of loss control, stability and value for money, Harriss advises. “It also minimises the likelihood of any nasty surprises.”
Many businesses fall into the trap of thinking that the broker and insurer will manage all the claims, Harris says.
You need to know your deductibles, have quarterly meetings with the insurer’s claims department, ensure the broker actively assists you in making this a fully transparent process, know who the loss adjuster and lawyers are, and ensure you actively comply will all requests.
“Remember it is still your risk, your money, your reputation,” she says.
Keeping a risk register is another worthwhile exercise that assists with the decision-making process and enables each risk to be managed in the most appropriate manner, Harriss says. But it has to be managed correctly.
“Do not fall into the trap [of thinking] that just by populating the risk register with all this data that it solves your business issues – it doesn’t,” she says.
“Tools don’t make decisions – you do.”