Why it’s time for a clean start on your insurance strategy

Insurance is often an expensive budgetary item for cleaning companies but getting your policy choices and renewals wrong can be even more costly. There is a solution available, that helps companies with claims management, renewals, and data analysis of risks.

As CFOs, bosses and facility managers try to evaluate or renew their all-important insurance policies, two key factors often work against them – a lack of insurance expertise and a shortage of time.

There is no doubt that conducting reviews of insurance strategies, or managing client and public liability claims, can be a daunting assignment. Therefore, it is best left to the experts who are constantly engaged in such work.

“Insurance claims are a time-consuming task for people working at companies,” says Poppy Foxton, who for almost a decade has been Head of Claims at Risksmart, which provides risk and insurance solutions for businesses in cleaning, facilities management, retail and service-related industries.

“They might have to get their CFO, COO or operations manager or legal counsel to get heavily involved in the claims. That’s taking them away from their core job.”

Legal threats

Then there is the risk of either paying too much for insurance, or having too little cover at a time when there is an increasingly litigious business culture in Australia. On the back of the rise of no-win, no-fee plaintiff law firms, businesses and their insurers are subject to a growing number of claims, both litigated and un-litigated. The upshot is that getting your insurance wrong, or mismanaging claims, can be costly.

Foxton says the team at Risksmart includes qualified solicitors and insurance specialists who undertake professional investigations into claims and provide expert advice, ensuring that claims are resolved and defended as quickly as possible. Such proactive engagement with claimants, law firms and insurance stakeholders is designed to safeguard their clients’ reputations and finances.

“A huge part of what we do at Risksmart is protect our clients’ brands,” says Foxton, who adds that her team also prides itself on maintaining a good rapport with claimants so that claims can be resolved as amicably as possible.

She notes that court rooms are usually a foreign and frustrating setting for most cleaning company operators, who may still be subject to legal action despite trying their best to comply with contractual arrangements.

Risksmart can advise clients on when it is best to fight a claim in court, and when it is best to settle out of court.

“Our experience is valuable to avoid running a claim where you’re not going to win it and you’ll just end up burning through legal costs,” Foxton says. “You want to avoid paying more in legal expenses than the claim is actually worth.”

Proud history

Launched in 2006, Risksmart is a subsidiary of Honan Insurance Group, an Australian-founded insurance and financial services broker that was set up in 1964. Honan is now a major broker house in the Asia-Pacific region and has more than 240 employees around the world.

Foxton, who was recently appointed National Head of Corporate Insurance and Risks Solutions at Honan, says the inspiration for establishing Risksmart was the need for businesses to be able to better manage insurance deductibles, or excesses; that is, the amount a business has to pay if it decides to make a claim on its policy.

With its headquarters in Sydney but boasting a national presence, Risksmart has Australia covered. Its status as an associate member of the International Sanitary Supply Association means Risksmart understands the issues and threats facing many cleaning contractors with a retail or commercial presence.

Foxton says the truth is that risk management is often a forgotten or underplayed aspect of day-to-day operations for cleaning businesses and facility managers.

They can be exposed to significant risks given their role in environments such as hospitals and healthcare centres, food courts and commercial kitchens, and offices and shopping centres.

In such areas, there is a constant threat of slip-and-fall accidents, damage and breakages of expensive property, exposure to toxic and hazardous substances, and contractual disputes over just what services a cleaning or related services business should provide.

Even a seemingly simple incident such as a member of the public slipping on a floor because of a chemical or hand-sanitiser spill can lead to costly insurance claims and court action.

As Foxton explains, insurers naturally try to protect themselves by imposing deductibles.

“It’s a way of reducing their risk, but what it means for cleaning companies and others is that they have to wear the first $25,000, $50,000, $150,000 and upwards of every claim.”

To protect its clients, Risksmart’s experts navigate their way through complex insurance legislation that changes from state to state. Disputes are resolved in accordance with clients’ instructions, or under an agreed delegated authority.

Foxton is proud of her team’s proven ability to defend third-party claims. One client alone has reduced its average claims settlement by 95 per cent over a five-year period from $18,000 to $800.

The goal at all times for Risksmart is to minimise the lifespan of claims and ensure that claim-management fees and defence costs are monitored and minimised. “The only other option for businesses is to outsource to a law firm, which is very expensive,” Foxton says.

For its part, Risksmart charges an hourly rate and commits to complete fee transparency. “So our clients know with certainty what they’re paying for,” Foxton says.

Experience counts

One of the key benefits Risksmart can deliver for clients is tackling premium sprawl (see panel), a scenario in which the cost of insurance keeps increasing every year.

Foxton says insurers are currently operating in what is classified as a ‘hard’ market; in other words, they are coming off the back of a number of catastrophic events and associated losses that have buffeted their premium collections. The result is that, in many cases, insurance costs are on the rise.

The impact of COVID-19 and the pandemic – during which many cleaners have been working in high-risk sites – also means that many insurers are insisting on more exclusions with policies or using endorsements that modify coverage within an existing insurance contract.

“So a risk with a cleaning facility management, for which many insurers already don’t have much appetite, becomes even harder to place as the market hardens. It also means deductibles and premiums can go up,” Foxton says.

In such a market, the assistance of experts is especially important. Foxton says Risksmart works closely with insurance brokers to shape a risk profile for a business and to get the best possible coverage at a competitive price.

Delivering data analysis and training

The other big advantage with Risksmart is its ability to harness clients’ claims data to forecast and target key business risks and avoid margin erosion.

It offers a game-changing claims portal that provides quick and easy access to all claims data, as well as dashboards that track key risks and claims trends in real time.

“They can see it then and there,” Foxton says.

This can be especially useful for executives or facility managers who have to report to a CFO, the boss or a board. They can use the data analysis to articulate risk and insurance strategies and back up the need for spending.

“With some clients we have been able to do forecasts of risks based on 10 years of data,” Foxton says.

“For example, if our client wants to know how many people are slipping on grapes in a store, we can tell them that.”

Many cleaning operators struggle with low margins, and insurance spending and claims payouts can be a significant part of margin erosion. Foxton believes powerful data analysis can make a real difference to the bottom line by mitigating risks.

“By informing clients of such risks, we can help them to either avoid claims incidents in the first place, or defend the claims when they come up. The better you understand your risk, the easier it is to manage.”

Risksmart specialists also provide on-site training sessions for clients’ site managers to educate them about how to create a strong culture of risk management and safety within their businesses. In addition, they can “shadow” managers and workers to get an in-depth understanding of the business’s challenges and risks.

“We want to make safety top of mind for everyone who is out there on the floor because that can make the difference between a claim that’s defensible and a claim that’s not,” Foxton says.

As cleaning company leaders and facility managers combat COVID-19 and contemplate dealing with their insurance renewals and claims, Foxton assures them that help is at hand.

“There’s no doubt that insurance can be a very difficult area, but we can help reduce the number of claims incidents for clients and save them money on claims. We’ve been doing this for a long time and have a great track record.”

6 ways Risksmart can help …

  1. Stopping margin erosion whereby ever-increasing insurance costs can hurt profits.
  2. Reducing significant claims exposure due to unavoidable contract terms.
  3. Preventing premium sprawl that sees insurance premiums and deductibles keep rising year on year.
  4. Providing continual staff training on risk management.
  5. Informing data-backed decisions with analysis that lets companies understand high-risk areas of their business.
  6. Providing insurance and risk benchmarking to ensure companies know where they sit against their competitors.

… and some other important benefits

Risksmart consistently delivers the following benefits to its clients:

  • Cost savings through proactive claims management by engaging in structured settlement negotiations.
  • Strategic collaboration between clients and stakeholders.
  • Database systems that store and preserve evidence relating to incidents and claims.
  • Client risk profiles that help negotiate favourable terms with insurers for premium renewals.

Please get in touch to find out more about how we can assist you in claims management. Email info@risksmartclaims.com.au or call (02) 8297 1722

This article first appeared in the September/October issue of INCLEAN magazine. Read the original article here