As a business owner, you’re probably aware that property damage and employee injuries hinder productivity and profit. It pays to avoid and reduce the impact of these types of losses. Insurance companies and policyholders both benefit from an efficient loss control program.
What is loss control?
Insurance loss control is a set of risk management practices that reduce the probability of claims being made against a company’s insurance. These procedures involve identifying risk sources through a set of actions that are either voluntary, required or a combination of both.
Policyholders often receive incentives from their insurance providers to use risk management procedures. One example is when an automobile insurance company reduces a driver’s premiums as an incentive for taking a defensive driving course.
Insurance companies also sometimes require certain actions for risk management. For example, many commercial buildings install sprinkler systems and security systems in order to comply with insurance loss control procedures.
How to cut down on losses
Here are several steps that all organizations can take to improve their loss control strategy.
Create a loss control program
Your loss control program should have a thorough roadmap of guidelines and procedures that provide ways to predict, evaluate and avoid losses.
Conduct a loss control survey or risk management survey
This step is a thorough action to outline all the business processes, departments, types of equipment and operations. The risk management survey considers all these aspects and develops procedures to avoid and handle loss situations. Some procedures could include installing safety equipment, controlling temperature and humidity levels and providing proper protective gear to employees.
Encourage employee participation
If employees are not participating in loss control efforts, no program can be truly effective. Employees should be trained in loss control methods, and it could be worthwhile to enroll them in training classes. They should know what to do before, during and after incidents where losses occur. This is especially important for management. All levels of management should understand and embrace the company’s need to prevent and reduce losses.
Pay heed to advice from insurance companies
Insurance companies are in business to reduce risk to both themselves and your company. Although they are less concerned with loss control measures on your company budget, these measures will benefit both parties in the long run. The recommendations from loss control representatives lead to fewer claims and lower premium costs.
When creating a loss control program, identify key areas that are most likely to impact the business. If you get overambitious and try to prepare for every possible scenario, it will result in too much complexity. For example, most losses in businesses are caused by employee claims rather than natural disasters or other unlikely mishaps. Allocate resources to be prepared for likely loss scenarios.
Alternative sources of help
If the worst should happen and an extreme situation disrupts your business to the point where loss control measures are not available, have a backup plan. Consider who can help your organization in situations of power outages, material shortages, distribution problems and other vital disruptions.
Collaborate with other companies
Other similar businesses are often able to help you due to their experience and resources. Each specific industry has its own audit practices, statistical tracking methods and loss evaluation procedures. Don’t reinvent the wheel if there are roadmaps and best practices already out there that other companies could share with you.
It pays to practice wise, thorough loss control in your company. For even better results, it often pays to hire a loss control consultant to ensure that your company is complying with insurance requirements and minimizing risk in the most efficient way possible.