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Analysis

Retailers could be heading for a New Year insurance disaster

By Mike Elliott, CEO of Over-C

Among the huge number of changes brought about by COVID-19, one of the biggest shifts in 2021 will be the emphasis placed on mitigating physical risk for businesses. Whether it’s ensuring strict new hygiene regimes or policing slip and trip hazards within stores, organisations across the retail space in particular will need to mitigate the rise of risks on their premises despite a climate of job losses and necessary financial cost-saving policies. So, what can be done to mitigate risk, and can digitalisation help ensure better risk management without the need for large expenditure?

The economic problems caused by the pandemic are clear for all to see, and businesses are feeling the pinch. Organisations can’t unilaterally decrease rent or bills, so cost savings will inevitably be made through reducing service charges. This means fewer cleaners, maintenance workers or other vital frontline facilities management staff on the ground, which directly affects risk. What many top-level executives fail to realise is that the correlation between risk and frontline knowledge is huge. A cleaner knows how hygienic bathrooms are or when a spillage has been cleaned up. Scaling back operations, whilst a necessity for many management teams in these challenging economic times, results in a direct decrease in risk visibility and action.

With the average cost of a claim for an injury sustained in a retail environment at around £10,000, and with simple wet floor signs no longer sufficient defence in a contested claim, these cost-saving operations could ironically cost organisations more money than they initially save. With many retail stores having to pay out claims from their own store revenue rather than claim on the wider organisational insurance cover, how can the average small supermarket make savings in their frontline operations without increasing risk?

There is also the risk of increased insurance fraud to consider. With many now feeling the economic pinch of one of the worst recessions in the history of global business, many will be looking for opportunities to earn. With staff who would ordinarily police these issues cut back to reduce costs, the chances of both customer accidents and fraud has greatly increased. How can a retailer prove there wasn’t a slip hazard if the cleaner was too busy to note on a piece of paper that it had been dealt with?

The answer to both of these issues, as with so many other areas of our COVID-recovery, lies with new digital technology. Despite the increased risk associated with COVID-19, this is also the best opportunity organisations have to now make proper changes to their risk mitigation operations through adopting new technology. Frontline management apps which can track jobs and problems as and when they appear, for example, will allow for much greater management visibility into frontline risks, and can be used to better inform frontline workers where their priorities should be.

Understanding where and when risks occur is critical to improving risk mitigation operations, and ultimately changing the frequency and accidents (and therefore insurance claims) for the better. For a retailer looking to cut costs, being able to prove to insurers that they are running effective risk mitigation processes will be an important factor in helping ultimately to lower insurance premiums.

From in store trips and slips to maintaining social distancing, the retail sector is looking down the barrel of heightened responsibility to mitigate insurance claims. Stores will need to be looking to their IT systems and digital technologies to mitigate the rise of on premises accidents – if this isn’t addressed quickly, businesses are heading for an insurance disaster.


Mike is an entrepreneur and expert in connectivity and digitalisation. He is the founder and CEO of Over-C, a leading provider of digital platform management, which uses location, sensor data to empower front line workers.

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