Slips are almost always the largest cause and cost of claims, regardless of industry. If you can reduce your accidents and claims, though, what effect would this have on your insurance costs?
Reviewing premiums with two partners (one broker and one insurer), the spread of premiums paid by significantly—sized clients was from £4m+ to well under £50k but with businesses in diverse sectors and of differing turnovers, what drives the premiums? In very simple terms, it’s about your risk profile (how likely are you to make a claim) and how much risk you are sharing (what is your deductible excess i.e. the amount of any claim will you pay yourself before the insurer needs to start to pay).
So, if you were expected to have 100x claims at £100 with a £50 excess, the cost to the insurer would be 100 x £50 = £5,000 and you’d also be paying 100 x £50 = £5,000. That would lead to one level of premium.
But, if you were forecast to have 100x claims at £100 with a £75 excess, the cost to the insurer would be 100 x £25 = £2,500 and you’d be paying 100 x £75 = £7,500. The premium in this scenario would be lower as the insurer’s cost is lower.
This shows the effect of the split of risk on your insurance cost, but what about the benefits of risk management to improve your risk profile?
Reducing the claim frequency and taking a higher deductible gives an even more interesting scenario. 25 expected claims at £100 with a £75 deductible sees the insurer paying out only 25 x £25 = £625. Your premium therefore will be significantly lower in this scenario than at 100 claims with a £25 deductible.
Given slips account for 33%+ of claims volume and 33%+ of claims value, a reduction in your slips of 50% could have a significant impact on your risk profile, and give you more confidence to carry more risk through a higher deductible, meaning an overall lower insurance cost and of course a lower total cost of risk.
Of all the possible risk management initiatives you can take, looking at slip safety is likely to have the greatest effect due to the sheer numbers, and the predictability of those numbers, involved. Year-in and year-out companies have huge numbers of slips. If you can prove that you have significantly affected those numbers, insurers will recognise this immediately. No other element of risk management can have such a demonstrable effect.
Your goal from a risk management perspective, therefore, should be to achieve fewer claims as soon as you can thereby improving your risk profile. This should lead to potential savings on premium levels.
Stage 2 is when you have full confidence that your slip safety strategy is robust, is systemised, and is working as well as it is designed to; you can then take more of the risk burden yourself with a higher deductible excess and that is where you’d see the most significant savings.
If you want to learn more about how slip safety can reduce your insurance costs, book your FREE Slip Safety Strategy call HERE