Loss Control Commitment

Loss control is the first casualty of budget pressure in commercial lines and the last investment that should be cut.

When loss ratios deteriorate, the instinct is to cut expenses — and loss control engineers and risk consultants are expensive, visible budget lines. But loss control is not overhead; it is a mechanism for improving the quality of risks in force and reducing the frequency and severity of future losses. Cutting it in a bad year accelerates the deterioration of the next year's results.

The carriers with the strongest commercial loss ratios over full market cycles are almost universally those with sustained, well-funded loss control programs. The connection is not coincidental. Better-managed risks have better loss experience, and loss control is the service that helps policyholders manage better.

There is also a retention benefit that is harder to measure but equally real: commercial policyholders who receive substantive risk management consultation are more loyal than those who only hear from their carrier at renewal. Loss control builds relationships that outlast rate cycles.