Risk Management

At Summit, we offer services far beyond what you have probably seen from most agencies. That is because we're not just insurance agents, we are risk managers. That means that getting you a competitive insurance quote is only the beginning of what we do. As you read below, you can see some of the different ways that the cost of risk can affect a company, and how we can give you the tools to reduce those costs, and increase the profitability of your business.

Components of Cost of Risk

1. Insurance Premiums - Many agents look solely at this. While you do want to keep this as low as possible, it should not be done by means that unnecessarily raise the other components.

2. Retained Losses - There are two kinds or retained losses. Active losses are those that you are aware of and choose to have, generally in the form of a deductible or self-insured retention. Passive losses are far more dangerous. These are the ones that you are not even aware of being uncovered. It might be an exclusion on a policy or a risk you don't have insured.

3. Risk Management Departmental Costs - Every company has to do some degree of risk management, and every company has internal cost associated with it. In larger companies, this can be the salaries and expenses associated with an official Risk Management Department. In smaller companies, it is generally the time spent by an owner or corporate officer. A good risk manager can find ways to reduce that time spent.

4. Outside Services - These are fees paid to outside professionals. Those professionals can included agents or brokers (fees in addition to commissions), consultants, attorneys, actuaries, and accountants.

5. Indirect Costs - These costs are usually the hardest to recognize but can be the largest component. The most common are associated with recovering from an accident, often an employee injury. Such costs can included lost productivity, training of a replacement, overtime, and opportunity costs. On average, these indirect costs total 2-4 times the amount of the direct loss.

 Summit Risk Management Services

Insurance Premiums

 Costs your company may see: Virtually every company pays some form of insurance premium. Effective risk management will not eliminate all premiums, but it should identify wasted or inefficient premium dollars. Some common examples of wasted dollars:

Ø      Inflated premiums that result from classification errors

Ø      Surcharges from incorrect experience mods

Ø      Policies covering nonexistent assets

How Summit can help: Many agents offer to review coverages, but our services go far beyond what is typically seen. A few of those are:

v     Audit preparation

v     Experience mod verification and tools

v     Quarterly claims reviews

Retained Losses

 Costs your company may see:  Part of a company’s overall risk strategy may be to retain certain losses in order to reduce premium. However, problems are still common:

Ø      Deductible options incorrectly utilized

Ø      Unexpected passive losses

How Summit can help: Our goal is make sure that your retained losses are active and that deductibles are where they should be:

v     Deductible/SIR analysis

v     Personalized risk surveys

Risk Management Departmental Costs

Costs your company may see: The biggest portion of departmental costs tends to be the salaries and wages of those handling risk management duties. For smaller companies, these generally manifest themselves as opportunity costs:

Ø      Salaries of risk management personnel

Ø      Time spent by owners or corporate officers

How Summit can help: Many agents offer to review coverages, but our services go far beyond what is typically seen, including:

v     Website services to reduce the time required handling insurance

v     Loss analysis and assignment, including identification of loss drivers

Outside Services

 Costs your company may see: Fees paid to a number of professionals outside of your company:

Ø      Accountants

Ø      Attorneys

Ø      Safety Consultants

How Summit can help: We generally do not seek to eliminate the need for these professionals, but rather to ensure that you are using them only when necessary:

v     Accrual schedules for your insurance premiums

v     Contract review for coverage requirements

v     Access to professional safety materials and resources

Indirect Costs

 Costs your company may see: Indirect costs typically represent a bigger expense to companies than direct losses, as the table below illustrates. However, their impact is often unrecognized, and rarely effectively handled:

Ø      Overtime

Ø      Opportunity costs

Ø      Lost productivity

How Summit can help: We offer services to help prevent losses and to help reduce them once they occur:

v     Policy checklists

v     Return-to-work programs

v     Program reviews

To calculate the indirect cost of this injury or illness, multiply the direct cost by a cost multiplier. The cost multiplier that you use will depend on the size of the direct cost.