Insurance Loss Control and the Hippocratic Oath

Roles versus Results

I believe that each of these roles provides measurable risk mitigation benefits to the client, and when the right role is matched to the right client based on complexity of risk and related factors, it enables great efficiency. The potential downside to the model is that it is easy to reward the insurance professional for great productivity measured in the number of visits (simple metric) instead of evaluating based on the impact of services delivered (harder to measure). This model encourages short visits to many clients with a measurable interaction at that client location (e.g., issuance of recommendations for improvement, suggestions of how to better comply with underwriting guidelines, etc.).

Further, there is a tendency rooted in basic human nature for individuals to oversimplify processes that would benefit from a more studious approach. Hence, we see a split between those professionals who focus on regulatory compliance and monitoring rule compliance in lieu of creative risk management, risk mitigation, and risk transfer strategies. In these cases, we tend to find a highly reactive nature toward risk management practices—racing to put out fires instead of planning to prevent them.

On the other hand, when insurers invest in developing relationships with their larger, more complex clients, they focus on longer-term goals and objectives. When fully implemented, these plans should enable clients to achieve highly predictable risk results on a year-over-year basis. With this stability in place, the policyholder has the capability to take on new risks and grow his or her operation into new areas.

The highly consultative professional typically represents a challenge to managers in that metrics are based on multiyear plans, high budgets, measuring their ability to influence clients in highly dynamic environments, and finding nontraditional metrics that would appropriately capture the consultant's success.

Whether labelled as an inspector, coach, auditor, or consultant, loss control professionals have to exhibit credibility in their commitment to address risk effectually. Just like a physician, they need to save the patient without causing harm.

"First, Do No Harm"

The modern Hippocratic Oath ¹ calls for physicians to focus on two key principles when treating patients.

• Help them achieve better health.
• Don't make them worse off in the process.

The relationship between a physician and his or her patient is a lot like the relationship between a loss control professional and his or her organizational client.

• Both provide advice with the best of intentions to avoid disease and increase vitality.
• Both are skilled, urgent investigators when there is a problem who seek to uncover contributing factors and distinguish symptoms from causes.
• Both develop a detailed diagnosis and treatment plan based on experience, research, consultation with additional experts, and compassion for the patient's speedy and full recovery.

Where the physician's oath reminds physicians of their primary duty to assist the patient, as loss control professionals, we have a duty to both our employer and our clients to help the policyholder improve safety results for our employer's profitability, but also to avoid harming the policyholder's organization in the process. It is possible that these goals can present conflicts at times.

I have observed some professionals who have a strict insurer-first mindset submit recommendations that would seek to restrict the policyholder's operations through aggressive risk avoidance. One such illustration would be asking a human services agency to remove all pools from their group homes instead of working with them to assure that the pools are properly maintained, regulated, and supervised. Removal of the pools assures no potential for swimming-related deaths, but it also curtails the ability of the agency to fully accommodate their clientele during hot summers.

It is the most expedient way to keep the insurer from incurring accidental drowning claims, but is it a fair way to address the risk from the client's perspective? The client will now have to place its residents into vans to transport them to city pools where there is less privacy, more noise, distraction, etc. Further, the residents are exposed to motor vehicle collisions, heat exhaustion from being in vans whose air conditioning might fail, etc. In some ways, "the remedy is worse than the cure."

In another illustrative scenario, an auto repair shop owner acknowledges that he would like to expand his operation to include basic paint and body work (instead of handling only mechanical repairs). How might each style of loss control professional address this discussion?

• A consultant would outline the potential risks of adding flammable automotive paints, fiberglass, sheet metal work stations, etc., and begin the process of helping the account build a plan that anticipates the newly added risk, with appropriate controls based on a measured timeline.
• A coach might email several technical bulletins on key risk topics and set a follow-up date to see if there are other simple ways to advise from the sidelines.
• An inspector might simply cite the regulations and reasons why expansion would present problems of compliance to the owner. He or she might issue recommendations as a preventative measure, asking for a written response from the policyholder if these proposed plans are pursued.
• An auditor would provide a detailed report to his or her underwriter and suggest that they continue to visit the account on a periodic basis to see what actually develops. The intent is to adjust premiums at the next renewal to stay ahead of the potential for losses arising from the new operation.

We would hope that, regardless of style or approach, no loss control professional would simply discourage the business owner from expanding into body work due to lack of experience in that area. This tactic would avoid risk, but it also curtails potential growth of the organization that is being insured.

Effective Risk Management Enables Growth and Expansion

One of the fundamental reasons insurance exists is to enable organizations to step out of their accustomed comfort zone and take reasonable risks to expand and grow. They can only accomplish this growth when they are reasonably assured that there is some financial security backing them in case of failure. If loss control professionals were to unilaterally discourage all risk taking through heavy-handed tactics, we might improve conditions for short-term gain, but in the long term, we'd be hurting our clients or lose them to another insurer that is less restrictive.

Of course, I'm not suggesting that the best insurers encourage their clients to take risk lightly or without proper planning. Nor am I suggesting that insurers do not have the right to declare profits by managing and pricing risk appropriately. I'm simply acknowledging that it takes a much greater effort to improve the risk management situation without resorting to aggressive risk avoidance, but the rewards are greater for both parties, as well.

Making It Work

Effective consulting depends on two steps—learning about your policyholder's operations and goals (developing a good understanding of your patient) and then partnering with them to find ways to accomplish their goals with the least risk possible (help them manage risk instead of merely avoiding it). Sometimes that calls for very creative solutions or making suggestions that are outside of our normal comfort zone.

A good example from my past was a commercial bakery whose injuries among delivery staff, combined with vehicle collisions, were the greatest concern. In digging into their fleet operations, we discovered that their fleet vehicles were an outdated design (e.g., high floors requiring steps, ramps, lifts, etc.), they were maintaining a very expensive spare parts inventory, and their trucks were ill-suited for the type of product being carried and the types of loading/unloading situations encountered.

In talking with leasing companies, we learned that we could dramatically improve the situation by replacing the owned fleet with a leased fleet "overnight." Traditional approaches would have required us to slowly retrofit the trucks with expensive aftermarket ramps, handles, mirrors, steps, and lights. Instead, we converted the spare parts and old, owned trucks into working capital; got the drivers into new equipment all at once; and saw manual material-handling issues evaporate, as the new trucks were designed to accommodate the existing loading docks and ease curbside unloading issues with low floors closer to the curb.

Regardless of the scenario, if we've established a proper working relationship and sought greater expertise when necessary, we ought to be able to explore these possibilities in good faith and with transparency about budgets and feasibility.

Loss control professionals who study the modern version of the Hippocratic Oath should be encouraged by these stanzas. ²

• I will remember that there is art to medicine as well as science, and that warmth, sympathy, and understanding may outweigh the surgeon's knife or the chemist's drug. (Relationships build trust and open communication to enable effective consultation.)
• I will not be ashamed to say "I know not," nor will I fail to call in my colleagues when the skills of another are needed for a patient's recovery.
• I will prevent disease (not measured risk taking, but unmitigated losses) whenever I can, for prevention is preferable to cure (post-loss reactionary measures).
• I will respect the privacy of my patients, for their problems are not disclosed to me that the world may know. (Expertise is meaningless if we are not trustworthy and discreet, too.)
• I will remember that I do not treat a fever chart, a cancerous growth, but a sick human being, whose illness may affect the person's family and economic stability. My responsibility includes these related problems, if I am to care adequately for the sick. (We ought to care for the whole organization's wellbeing and not be indifferent to unintended consequences.)

Conclusion

Loss control professionals don't merely consult with a "policy number," but an organization made up of people earning a living. We need to approach this responsibility with awe and urgency—to assist, to encourage, and to guide onward to new heights of achievement while sidestepping needless risk or risk that is unreasonably overwhelming the odds of organizational success. Whether we play the role of a coach, inspector, auditor, or consultant, we should seek to heal and do no harm (even unintentionally). Showing the utmost respect for our clients should also safeguard our employer's profitability.