Corporate Risk & Insurance gets the lowdown from SR2 Health’s Brett Wheatley on why managing medical risk can create savings that run into the hundreds of thousands.
What is medical risk?
Medical risk means , in essence, is there a fit for work component that needs to be understood that could ultimately expose an organisation from its duty of duty of care liabilities and duty of care responsibilities to employees?
The last thing anybody would want is for somebody with a severe undisclosed condition to go to a resources site, for example, and potentially impact the output productivity and their own health and wellbeing through an undisclosed medical condition.
So it’s about recognising the risks, understanding the risks and mitigating and managing those going forward.
How are medical risks measured?
That risk is actually quantifiable, measurable and manageable. Firstly, based on historical evidence – because a lot of these organisations have kept certain data. There are also some tests that you can run, so it’s really the group analytics.
You can do some sensitivity analysis on that history and say ‘if this solution had have been implemented, it may have reduced lost time by four days – which equates to n dollars’. Or ‘you may not have missed that major deliverable under a contract’. There are a whole raft of things that are specific to each organisation.
From a life insurance aspect, there is an apparent stream of medical information which is perhaps not appropriately utilised by life insurers when they decide or determine to initially accept a risk – or on what terms if they had known that information.
Or, when it comes to claim time, how can a better understanding of medical risk reduce the time off work, for example, for an income protection claim. Those reductions can lead into hundreds of thousands of dollars of savings.
Are insurers and their clients working together on medical risk management?
That’s what we’re deploying – solutions that can be embedded in that insurer’s offering. Not so much in the product, but in their relationship with the customer or the policyholder – together with the way that the issue is internally identified, managed and considered by the insurer taking on board this new medical capability.
How should medical risk fit into a risk manager’s considerations?
It’s part of the overall risk management framework. So you’re going to have explicit risk, implicit risk, financial risk and now there is an emerging body of thought regarding medical risk.