Part 1: Triangular Risk Management (TRM) in the Alternate Energy Industry.
Triangular Risk Management (TRM) is best defined as the collaboration between the Insured; the Broker; and the Insurer - working in unison to achieve a trustingrelationship towards the common goal of protecting the financial interests invested into the business.
Enterprise Risk Management is an important tool, used by all businesses to identify, assess, monitor and control the various risks that affect their business.
Many businesses are already aware of the benefits of using TRM to ensure sustainability of their risk transfer and insurance program by partnering with the experts in risk. Premiums are influenced by the manner in which businesses are able to address and mitigate their unique risks and therefore the TRM process is a long-term partnership and not short-term solutions to cheaper premiums. The partnership should never be considered as an interchangeable part of an insurance bidding game, but a long-term solution protecting assets and having peace of mind knowing that the chosen Insurer and Broker partner have your business interests at heart.
Selecting the risk experts to partner with you is critical, you need an Insurer who has vast experience in underwriting risks within the alternate energy industry, one who has sufficient data and statistical information accumulated over a number of years specific to your industry and subsequently developed a clear and concise understanding of the potential risks, hazards and potential harms that may affect your business so that they are best equipped to underwrite the risks at policy inception. You could easily be persuaded in to selecting a general Insurer based on premium competitiveness, however, this is not going to be sustainable in the long-term as the insurer will be addressing underwriting shortfalls on an as and when basis, particularly when claims are experienced, the most common practice is premium hikes at renewal and imposing special terms and conditions that limit the Insurers exposure. – Very different to the solution offered by the experienced Insurer.
The Broker is the main communicator, ensuring that the Insured and Insurer have complete understanding of their responsibilities and bond the relationship. A seasoned Broker will understand risk management and the value this has in achieving a well balanced and sustainable risk transfer program and work with both the Insured and Insurer to achieve the optimum objectives. The Broker’s centered function is to co-ordinate the risk identification, control and transfer process by using his experience and understanding of the industry and developing solutions that are attractive to the Insured and the Insurer. The relationship between the Broker and both the Insured and Insurer is therefore based on trust and confidence, the Insured should trust that the Broker has made suitable recommendations to implement a sustainable risk management and insurance program; whilst the Insurer has confidence that the Broker understands the clients exact needs and matched these with the policies on offer.
There are no identical businesses within the alternate energy industry and as a result of which the risks, hazards and potential harms differ considerably. Over the course of this series commissioned by SAAEA (www.saaea.org) we will attempt to cover the topics of Risk Identification, Risk Control and Risk Transfer.
For more information about Triangular Risk Management or discuss the Sustainable Energy Insurance Program developed by QuattroSure in more detail, please do not hesitate to contact Kevin Foot.
Regional Managing Director
(Office) 011 783 4926
(Cell) 079 887 9620
Quattro is a multidisciplinary financial services group, which offers sound financial advice to both individuals and businesses. Our business is driven by ethics, integrity, and providing objective advice in the interest of our clients.www.qfg.co.za