Reduce Total Cost of Risk by 37%

Risk Management

Managing Risk to Capture Additional Profit:  Reduce Your Total Cost of Risk by 37%

There are several transformative changes occurring in the Property & Casualty Industry at both the insurer and brokerage level.  Understanding these evolving conditions and engaging  available opportunities will deliver greater control of your insurance program to impact a lower Total Cost of Risk (TCOR) and generate more profit to your business

The major changes in the insurance and risk management climate range from insurer consolidation, precedent setting court cases, and brokers becoming more consultative with deeper risk management expertise while utilizing the benefits of advancements in analytics.

Industry Consolidation

The most notable industry event is the recently approved $29B merger between ACE and Chubb Insurance Companies, making it the largest of its kind while continuing a decades long trend which has whittled 30 national multi-state, multi-line insurers to just a handful. The expected on-going consolidation of carriers of all sizes means fewer options available to buyers and less competition with minimal premium differential among insurance companies. This is evidenced by the shrinking number of available healthcare insurers.

Legal Precedents

Additionally, several court cases have given buyers of large-deductible Workers’ Compensation programs more control of their collateral requirements, and enhances the availability of captive insurance as a viable option for mid-market, privately held businesses.  Dr. Robert Hartwig, President, Insurance Information Institute notes that the top mega-trend reshaping the insurance industry is “The continual movement by organizations into the Alternative Risk Transfer Market (ART), namely through the use of captives.”

Evolving Broker Services

The most visible change and one insurance buyers will contend on a daily basis is the evolving broker service model. Consider the time-honored and more subjective method businesses use to place coverage by engaging multiple brokers, which undoubtedly you have used in the past. The purpose and value of this model for canvasing the market to procure competitive terms and conditions is no longer a distinguishing point of differentiation for brokers. Today, this practice is outdated, ineffective and time consuming to manage, primarily because brokers now have access to essentially the same insurers. Then, most brokerage firms upped the ante by investing in internal resources to assist in claims and risk management for their clients. While these services are important, selecting a broker based just on these value-added services is also no longer a point of differentiation.

Data For Better Decision Making

Understanding these industry dynamics, limitation, and opportunities and in an effort to be more competitive, a very few brokers serving the Mid-market have enhanced their offering by becoming more consultative and less transactional, investing in technology, developing analytic capabilities that include dashboards to analyze, track, and measure risk for decision support, with the ability to predict outcomes and deliver a quantifiable ROI. These capabilities make a broker more competent, valuable and completely transparent and accountable for obtaining the desired results. Access to highly detailed and individualized analytics gives C-suite decision makers essential metrics with actionable information, that previously was not available. This allows more timely, informed and precise decisions about the insurance and risk management programs to improve the risk profile, measure and quantify outcomes to realize more profit.

How might the analytical process impact your business or affect how you operate? For example, in every other buying decision, you look for providers who can help you drive earnings, increase productivity and add to shareholder value. These industries are providing you with ROI data and analytics for predictive decision making. Yet, when choosing your risk financing partner and risk management service providers, you are given a very limited method of selection.

More specifically, the C-Suite buying style makes business decisions based on ROI, EBITDA, productivity and ownership valuation. Therefore, the purpose for selecting a product or service is the ability to lower operational costs and improve business performance. As such, the purchase does not revolve around the product or service itself, but rather the user’s results. The primarily element for making this decision is the metrics that validate the desired results and the ability to measure financial outcomes by using those metrics.

Applying this context to property & casualty insurance, and workers’ compensation in particular, for decades the only differentiator between brokers was pricing, coverage and carrier representation. As we know, this approach meets a fundamental need, but very little leads to actual differentiation or long-term, strategic business solution.

Today, forward thinking brokers, like Orion Risk Management, are attaching ourselves to metrics instead of just the insurance transaction to provide lasting business solutions. Orion affects a client’s financial statement for improved financial performance, not simply insurance performance. We are reducing the Total Cost of Risk by an average of 37%, and in some cases, as much 82%. An integral part to this new approach in analyzing, evaluating, measuring and tracking important data is developing key performance indicators to improve results. The information is there, and it takes a skilled broker to draw out the relevant data points.


It’s said, “The one Constant in Life is Change.” This certainly applies to the changing dynamics in the Property & Casualty marketplace, including consolidation, regulation, emerging legal barriers and opportunities as well as how organizations engage with insurance brokerage community to choose its broker. The insurance brokers’ value proposition has evolved from a third party, price based transaction to one engaging the client with value added service to the emerging results-driven approach of providing the sophisticated analytic services available today. However, there are few brokers who have moved beyond the status quo, as Orion has, to enhance their service capabilities by adopting the proven methodology using deep data to identify and eliminates risk, reduce costs and drive productivity, earnings and ownership valuation.

Adapting to this new risk management landscape, Orion Risk Management has drawn on many years of helping clients obtain a competitive advantage, by taken the lead using an innovative, consultative and diagnostic approach that incorporates analytics to improve outcomes, quantify the results of our services and measure the impact on your bottom line.

 To find out how you can improve your profit through ORION’s unique methodology, please contact m

To learn more about the benefits of analytics, my article How the Movie Moneyball Can Help You Manage Risk & Capture Profit. This and other timely insurance information are available on my blog: Risk Management Answers.

Stephen Paulin CIC

Workers’ Compensation Practice Leader


                              Fortune 500 Solutions for Mid-Market Businesses

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