What is your TCOR (Total Cost of Risk) for your Property Insurance?
Many Businesses look at their Insurance Premiums as their cost of risks from year to year and do not take into account what their real costs associated with their property exposures are. You hear a lot of discussions about Workers Comp and Liability when talking about Total Cost of Risk but very little is said about your property exposures.
The Total Cost of Risk (TCOR) is defined as the overall costs associated with running corporate risk management program. These include such items as:
- Insurance Premiums
- Uninsured Losses or Losses exceeding Insurance Limits
- Risk Control or Safety Expenses
- Management's time in dealing with issues (claims, contractors, moving tenants)
- Reputation with Insurance Companies (future premium increases)
- Loss of Reputation in Community
- Fines (City, State, Federal)
- City or State Mandates (ordinances) that force upgrades after a loss
When looking at these issues, most would have to agree that avoiding the loss is by far the best way to lower your TCOR and a key component of risk management. Even though many say that there is not much they can do to lower their risk cost or, “it is just luck” that could not be further from the truth.
Here are some items that can lower your TCOR for your property exposures:
- Inspections of Property to identify problems to prevent losses
- Fire safety equipment such as extinguishers, alarms, & sprinklers
- Properly Value Properties before loss
- Contractor Hiring & Risk Management Transfer
- Proactive improvements to property such as electric, roofs, plumbing, etc.
- Disaster Recovery Plan
- Tenant Screening where applicable
We will explore these in future articles.
Chris Moxley, CIC, CRIS