Annual insurance reviews are often transactional, as meetings focus on premiums, renewal timing, limits, carrier options, and deductibles. Those conversations remain important, but they are no longer sufficient on their own in today’s world. Businesses evolve faster than many insurance programs and risks change frequently while insurance reviews often rely on loss runs and high-level conversations that do not fully capture how a business operates today.
Read on to learn how to turn insurance reviews from transactional to meaningful by approaching them like operational risk assessments.
How to Turn Insurance Reviews Into Operational Risk Assessments
Approaching insurance reviews like operational risk assessments can help agencies identify emerging exposures, improve coverage alignment, reduce E&O risk, and strengthen policyholder relationships by positioning the agent as a strategic advisor. A significant challenge businesses face today is that operations change quickly and insurance coverage does not automatically keep up. This means companies may underestimate their risk exposure and overestimate their insurance protection. By having operationally-focused reviews, agents can learn about these new exposures earlier.
To turn an annual insurance review into an operational risk assessment, agents can follow some of these tips:
Align coverage discussions with operational workflows.
While traditional insurance reviews often evaluate policies individually, exposures develop operationally within businesses. An operational risk assessment begins by considering how the organization functions on a daily basis, including revenue, dependencies, risks, vulnerabilities, changes, and exposures. The operational approach helps identify interconnected exposures and those buried within silos that otherwise might be missed.
Business interruption coverage is a good example of a potential coverage gap that can be identified through an operational risk assessment. Some policyholders focus more on property values while underestimating the financial loss of downtime. An operational risk assessment approach focuses agents on broader questions to produce meaningful outcomes.
Consider new operational exposures resulting from technology adoption.
Many businesses are adopting new technologies faster than insurance discussions and updates. New, interconnected risks are introduced as businesses increasingly are relying on cloud-based operations, AI-enabled tools, SaaS providers, and remote workforce platforms.
An example could be a malware event which results in more than cyber concerns. There could be business interruption losses, fines, reputational losses, and additional expenses associated with fines and customer notifications.
By incorporating operational discussions into insurance reviews, agents can help policyholders manage and mitigate these risks proactively.
The Advisory Opportunity for Independent Agents
In a competitive market, agents continue to search for ways to differentiate themselves beyond pricing. Operationally focused insurance reviews are a significant advisory opportunity that adds real value to policyholders throughout the year.
Many policyholders do not fully understand how their operations decisions can affect insurance coverage like underwriting eligibilty, business continuity, litigation risk, and coverage applicability. Should a claim occur, many fail to realize how their loss history and claim severity can impact future coverage.
Agents can ask deeper operational questions, turning insurance reviews into advisory opportunities. Agents can ask about recent operational changes, vendor relationships, customer interactions, and technological dependencies to improve visibility into potential exposures. This often has the affect of strengthening policyholder relationships, improving account quality, and reducing E&O exposure.
As commercial insurance continues to become more operationally complex, it is increasingly important for agents to understand how the business itself actually operates.
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External Links:
- https://www.metricstream.com/learn/operational-risk-assessment.html
- https://content.naic.org/cipr-topics/business-interruptionbusinessowners-policies-bop
- https://www.forbes.com/councils/forbesbusinessdevelopmentcouncil/2020/10/22/sales-isnt-about-selling-why-sales-reps-need-to-be-consultants-and-analysts/
