HELPING YOUR CLIENTS WITH RISK MANAGEMENT

Rough Notes, Jan 2004 by Smith, Doug

Lessons learned from a public entities insurance pool

As a faculty member for a risk management education program (CRM), I have been challenged by the diversity of audience members. Agents and brokers are present in force, and insurance companies are well represented. Full-time professional risk managers, accountants, attorneys and various types of consultants are also in attendance. These professionals already understand the significance of risk management and are trying to increase their knowledge and network with others in the field.

However, another target market of equal importance for risk management training is tougher to reach. There is a clear need for tens of thousands of businesses, public entities, nonprofit organizations and other firms to learn about risk management, both in the United States and worldwide. As that audience learns about the positive bottom line impact of strategic risk management, business owners, CEOs, CFOs, and others will begin to embrace and financially support the risk management process and department. Meanwhile, it is up to those of us who are already risk management professionals to help spread the word.

We run a property/casualty insurance pool and a workers compensation trust for public entities. Most firms are small (10-50 employees), some are tiny, and a few would be considered "large accounts" by most brokers. Only a handful has assigned the specific task of risk management to one or more employees.

Our pooling management firm tries in several ways to turn our member public entities into risk managers. Most of these ideas could find application in the business world, as well.

Specifically, we help our clients manage their risks in the following areas:

* Provide tools to educate themselves

* Analyze contracts

* Provide education and professional lists

* Conduct training sessions

* Analyze losses

* Organize safety committees

As our firm does, insurance agencies should help their clients with risk management tips, suggestions, and services whenever practical.

Provide tools to "become fishermen"

We receive frequent calls for help. When we can best help by assigning someone with particular expertise, we do so. But ideally, we provide the members with the tools to "become fishermen" themselves. We ask our clients, "Have you researched the matter yet? Can I send you some materials to look through?"

A typical example involves skateboard parks. Everyone in our state seems to be building or expanding one these days. We have developed a kit (all right, a stack) of materials which goes out with a cover letter in response to a call for help from a public entity. Examples of rules to post, types of accidents that occur, even sample design specifications are included. We have given up trying to keep the jumps short or the bowls shallow and, instead, focus on professional design and maintenance, proper posting, and enforcement of rules.

Contract analysis

Contract analysis is a frequent task that agents or consultants often are called upon to perform. Each situation is different, so we try to read the entire contract and provide our perspective. We leave it to them to make the revisions, though. We make suggestions such as, "Here's my understanding of the intent. Do you really want to hold them harmless to that extent?" or, "This seems ambiguous to me."

For complex situations involving statutory responsibilities, we may send the contract to one of our attorneys for feedback. We don't pay attorneys to review every contract until at least two of our risk managers have already been involved, but we don't want to pretend to practice law, either. Still, there is no question that risk management practitioners often understand certain practical aspects of contracts better than, say, our district attorneys.

Educate others and develop lists of professionals

Mold is the millennium's asbestos/ radon/tobacco. Our excess forms utterly exclude mold losses today, but we try to provide identification, analysis and control assistance to our members nonetheless. We constantly exhort them to move quickly when water damage or leaks are discovered. We educate them as to ramifications of not doing so. We maintain a list of competent professionals (industrial hygiene consultants, quick response "dry-out" firms, remediation specialists, contractors) who have honest track records. We warn the members of "bad science" and opportunists who surface.

Training sessions

Our elected officials are constantly changing. In some precincts, local government is a revolving door. The people we trained last year have been replaced by a new batch of risk management neophytes. So, we have developed a few "dog-and-pony shows" which are also constantly evolving. One of them we call the POL/SOL (public and school officials liability) workshop. The general idea is first to scare the dickens out of them; then, once we have gained their attention, to encourage them not to mess up (at least not intentionally) while in office. It is a twohour Powerpoint slide show tailored to our state members. The best way to avoid procedural lawsuits, we have discovered, is to help train people to do things right in the first place. We stress the need to create good policies, know them and follow them. We also try to teach them to respect risk a little.