In addition to your profits and productivity, the changing cost of your risk financing program must be monitored throughout the year. You must remember price is NOT the same as cost when it comes to your insurance coverage. Unless you are accurately measuring your Financial Leakage, you are looking at an incomplete picture.
Financial Leakage flows through your entire organization with each and every claim you experience, adding an additional 30% to 60% to your overall costs.*
These financially-corrosive indirect costs manifest in workflow disruption, brand/reputational damage, and equipment replacement expense - just to name a few.
To effectively manage and mitigate the damage these costs inflict upon your financial statement, you should take these 6 Steps with your insurance provider:
- Request a claims analysis that shows your claims AND the financial leakage that your business is suffering from those claims. You need to see the total picture.
- Embed these additional costs inside your budget to ensure accuracy going forward. Financial Leakage is a measurable loss that needs to be accounted for.
- Determine the percentage of negative impact against your most important KPI’s (e.g. How much margin is your Financial Leakage burning?)
- Ask your provider to create a plan for the reduction of these costs. There are important resources available to reduce this additional expense load.
- Monitor program effectiveness (#4) against your budget. Be certain that your financial leakage is being properly mitigated on a quarterly basis.
- Add the results to your “best practices” benchmarks for KPI improvement. Working with a broker who is capable of providing you continued business intelligence is crucial.
Speaking of, as an Analytic Broker our firm is uniquely qualified to assess your financial leakage AND create a plan of action to erode it. We’ll help you fill in the blanks on your budget and measure our success via the KPI’s that are most important to your business.
The first step? Contact us today. We will be pleased to provide you with a complimentary Financial Leakage assessment. Together, we’ll safeguard your financial statement.
Contact us today