How can insurance agents help their clients proactively manage risks?
The landscape of insurance is changing with the evolution of modern, proactive risk management tools that can help prevent losses before they occur. Do your clients know all the ways they can manage risk and prevent financial losses? We’ll help you think about ways you can help them.
What the future of risk management looks like
Managing risk has always been and continues to be the foundation of insurance. However, that doesn’t mean it’s a static field. While risk management used to be about reimbursing individuals after a loss occurred, these days insurance companies and agents are turning towards a more proactive approach: Risk prevention. In other words, proactive risk management is the idea of reducing or eliminating risks to avoid future losses.
Insurance companies would love it if you could keep your clients from ever incurring a claim. While it’s not possible to eliminate risks from the world entirely, it is possible to dramatically reduce the frequency and severity of losses in some situations.
Examples of proactive risk management
If a car doesn’t start until someone passes a breathalyzer test, you can dramatically reduce the chances of a substance-related auto accident.
If trucks can self-detect an upcoming mechanical failure, you can dramatically reduce semi-truck accidents from failing brakes.
If a wristwatch can detect the faintest signs of an abnormal heartbeat, someone can take aspirin and get to the hospital, preventing or reducing the severity of a heart attack.
These are just a few examples of how technology can detect risk factors and alert humans before something happens that would cause injury, financial loss, or an insurance claim.
Three ways insurance agents can help their clients proactively manage risks
Insurance agents aren’t fortune tellers. There’s no way you can tell your clients how to prevent any and all accidents from happening. But what you can do is help your clients think about ways they can proactively manage risks to reduce the chances of incurring losses. This is a win-win-win for insurance agents, your clients, and insurance carriers. So much so that insurance companies are often on board with helping clients put modern risk management practices into place and even providing incentives for those who do.
Real-time risk prevention using smart technology
Advances in smart technology are allowing individuals and businesses to stay ahead of risk more easily than ever before. Technology can aid in risk prevention by allowing individuals to visualize data, check maintenance issues, and eliminate human error in business processes. While there are plenty of ways smart technology is being leveraged to help mitigate risk, we’re going to focus on one key area for now: The Internet of Things.
You may not have heard the term Internet of Things (IoT), but we guarantee you’ve interacted with it at some point. The IoT refers to the interconnected collection of devices and physical objects that all interact and exchange data with each other over the internet. In simpler terms, it’s basically any smart technology or device connected to the internet. The IoT has allowed us to be more connected to each other and the internet at all times. It’s also enabled us to collect, communicate, and evaluate data with little to no human intervention.
This connectivity plays a key part in minimizing risk when it comes to human safety in industries like manufacturing and production. For example, connecting manufacturing machinery to IoT technology can help individuals detect small-scale abnormalities that could indicate larger future issues. Companies can use the IoT to help predict future risks and stop losses before they even occur.
People and businesses can also use the IoT to achieve quicker responses when accidents do happen, which can improve outcomes (including reducing costs). For example, if your car automatically detects a crash and alerts first responders, the time saved could be a matter of life or death for passengers. Quicker treatment can also mean lower medical costs, which can mean lower insurance premiums when applied large-scale across the insured population.
Not least of all, the IoT enables insurers to use real-time information to price policies instead of strictly relying on historical data. This can result in lower, or at least more accurately, priced insurance policies.
Reduce risk and prevent claims by encouraging less risky behaviors
Connected devices themselves play a large role in proactive risk management, but it’s not the only component. Human behavior will always be a risk factor. Another way agents can help clients prevent losses is by helping them promote less risky behaviors. And guess what? Technology can assist there too. Being safety-minded in the workplace is a longstanding best practice for reducing risk. With the help of technology, a safety mindset can go even further towards reducing accidents and insurance claims.
The basics remain the same. As an insurance agent, you can help remind your clients and their employees about the basics of safety by:
- Assisting with periodic safety training for new and current employees
- Providing training or training materials with best practices for your client’s specific industries
- Help your clients remember to update their employee handbooks and routine safety measures
- Ensure your clients are complying with regulations from OSHA and other organizations to keep workers safe
- Teach your clients the importance of reporting workplace injuries and filing workers’ compensation insurance claims as soon as possible
- Help your clients implement routine maintenance and safety checks on any machinery and equipment
None of these points inherently require the use of modern technology. But the future of risk management can take each of these risk-reducing and safety measures to the next level by automating them or even connecting them to insurance premiums to incentivize the behaviors.
Help your clients develop a proactive risk management action plan
Change is hard. Some clients may be stuck in the old way of thinking and see risk management as just making sure they’ve bought enough insurance to be covered if something happens. As an agent, it might be tempting to indulge a client’s passion for insurance products, but you also have a role to play in helping clients proactively manage their risk—not just buy a bunch of insurance.
Independent insurance agents who act as risk management advisors can reap long-term benefits far beyond a commission on selling a product. Acting in your client’s best interest, including helping them minimize instances of claims, leads to happier clients with greater trust in their independent agent.
This management action plan could include a comprehensive look into any buildings, equipment, vehicles, and systems the client and their employees use in daily operations. You may want to help clients build weekly, monthly, or annual system and maintenance checks into their plan, along with reminders to update safety training for employees. Encourage them to monitor the results of their new action plan to better understand the benefits of a proactive risk management strategy.
Is risk prevention really that important?
Absolutely! Not only can risk prevention help save your clients money, but it can also save them time, help them keep themselves and their employees safe, and positively impact their business’s reputation. It’s no longer smart to think about risk management as an afterthought. Helping clients manage risks and prevent insurance claims before they occur can keep their business running smoothly. As the insurance industry continues to evolve, including the introduction of modern risk management technology, doing this sooner rather than later can set your independent insurance agency apart.