The Reward of Risk Management v.s. Simply Buying Insurance for a Non Profit
I was recently reading an op ed piece in the NY Time entitled A Bad Deal on Malpractice . Whether you agree with their premise is not the point. What was interesting to someone who practices risk management is the enormous moral, social and financial benefits from using smart techniques and risk management protocols within your Non Profit Organization.
The article referenced New York Presbyterian Hospital/ Weill Cornell Medical Center and the enormous improvement they have seen in their malpractice claims when they simply stopped buying and paying for insurance and began to look at the correlation between the cost of their malpractice claims, insurance costs, patient care, and employee moral. By utilizing the time tested techniques of risk management they achieved amazing results. Simple things like focused staff training after polling staff and doing a simple trend analysis as it relates to their losses and claims, electronic documentation, and follow up. The hospital focuses on collecting the right data, reading what the data results, and then taking sustainable corrective action.
The amount the hospital spent annually for compensation payments and legal expenses to defend allegations fell by more than 90%. From 2003 to 2006 there average expense load was $27.59 million between 2003 and 2006. By 2009 costs fell to $250,000 in 2009, a remarkable drop of 99% reduction in losses. Folks, you don’t achieve that kind of result by taking your poor claims history, giving it to 4 brokers and have them come back to you with 4 insurance quotes, whereby you pull the trigger on the cheapest one. If your claims are bad enough the end result of your effort is the least of the highest price increases. Remember insurance companies don’t like to lose money and insurance for the most part is simply a very expensive credit line.
You don’t have to be the size of New York Presbyterian, nor do you need to have their resources. If you are a small NY Non Profit, a NY Nursery School, a NY Group Home, or a NY Supportive Housing Non Profit, same goes for NJ Non Profits & CT Non Profits; you have so many opportunities to reduce costs and losses sometimes by as much as 90%. Remember every dollar we save on the expense side can be allocated to your constituents. The key is to simply stop buying insurance and talk to an insurance brokerage firm that has a background in Risk Management. A talented insurance brokerage firm can help you identify the fricitional points on your balance sheet, and then come up with smart, intutive strategies to re-capture these critical resources so you can re deploy them back into your Non Profit Organization.
For those of you nodding , who believe that this is not just possible, but an absolute neccessity for your non profit we would like to suggest you call a Risk Advisor at Metropolitan Risk Advisory, anyone that practices the craft. We also suggest taking a hard look at your workers compensation insurance as we have found that to be a very rich area of ours since many non profits can be labor intensive , riddled with employee injuries, surcharges, incorrect experience modification factors, and error laden workers compensation payroll audits.
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