Is insurance missing out on the value of near-misses?
Near-misses are a useful indicator of an incident about to happen. However, insurers usually only ever hear about the real misses! RiskACUMEN's Nigel Raywood suggests encouraging greater disclosure of near-misses to reap risk management value...
IN JANUARY 2018, an employee of a garden and forestry business in Scotland was lucky to escape serious injury. He wasn’t so fortunate just a few weeks later.
David Grant, who worked for Christie’s of Fochabers at a depot near Buckie, had been operating a saw at the time of the initial near miss. The saw tilted forward and Mr Grant managed to pull his hand away just in time and only his glove was damaged, according to reports.
However, within a matter of weeks a similar incident occurred, when again the saw tilted forward with the blade cutting through Mr Grant’s left hand, damaging the tendons in his middle fingers and a knuckle, requiring surgery. He resigned shortly after the incident.
An investigation by the Health and Safety Executive (HSE) later found that the saw had not been adequately maintained and a protective guard was defective. The company was fined £30,000 in September 2020 at Inverness Sheriff Court after making a “prompt admission of responsibility” and having “taken steps to remedy the deficiencies.”
In health and safety practice, monitoring and acting upon near misses is regarded as fundamental when it comes to avoiding harmful and costly incidents. The HSE says employers should monitor and investigate incidents “to ensure that corrective action is taken, learning is shared and any necessary improvements are put in place.”
If we go beyond liability matters, the same can be applied to property, such as with minor ignition where a fire failed to spread or an attempted break-in, for example. In fact, all areas of risk will often feature a number of early warnings with a simple failure to act leading to a far more significant loss at a later time.
However, while insurers, brokers and their risk engineering and management representatives can certainly add value by helping to mitigate risks, it is a simple fact that we are all largely kept in the dark as far as near misses are concerned, and this is a big problem.
No claim, no value?
Any incident that doesn’t lead to a loss will often remain undisclosed to an insurer. After all, if there is no loss there is no claim to make. We have to ask ourselves, why would an organisation disclose it, especially if they are concerned that this may lead to punitive terms?
It would be easy for us to pontificate on behalf of the insurer and argue that the policyholder has a responsibility to disclose such incidents, but where is the value to the customer in them doing so? It’s all very well highlighting the principles, but what about the reality?
Perhaps we need to see near-misses from a more customer-centric point-of-view, otherwise in truth we’re never going to benefit from their disclosure from a risk management perspective - where their true value really lies.
As an industry, I believe we need to do more to encourage disclosure of near misses to insurers. We should turn these incidents into a positive. We need to show that disclosure can be rewarded, rather than punished, by offering better terms to those speaking up and provide rapid risk support to ensure near misses are treated as a warning of an impending claim to be avoided, rather than an indication of a poor risk.
Near misses are a great opportunity for our industry to show we can think differently. Handled well, a fortunate escape, openly disclosed and acted upon quickly can help portray insurance as a trustworthy risk management partner. One that assists rather than penalises.
What are your thoughts on the way the insurance industry handles near-misses? Please comment here or on our RiskACUMEN Linkedin page, or simply send me an email to firstname.lastname@example.org