The most direct cost, of course, is the price of an insurance policy, but it's the indirect factors the lost productivity value that often end up being the most important. That's because these factors can exceed direct costs, across all lines of insurance.

So, what is your real cost of risk? That was a central question we explored in a recent survey of 208 financial executives of midsized companies. The survey was conducted by market research firm Atlantic Research and Consulting.

We learned that financial executives expect greater productivity savings by reducing workers' compensation claim costs than by reducing claim costs for other lines.

Two-thirds of survey respondents said they save at least $2 in lost productivity expenses for every $1 saved by reducing workers' compensation claim expenses. By contrast, nearly 60 percent said they save at least $1 in lost productivity expenses (and related uncovered loss of value) for each $1 saved by reducing claim costs for general liability, property and commercial auto lines.

Why the difference in perceptions of workers' compensation versus other lines of insurance? Perhaps it's because we've been conditioned to believe so by conventional wisdom. If so, maybe it's time to think about risk in a new way, by posing questions some haven't pondered about the ultimate cost of risk.

The perception that there are greater productivity savings from workers' compensation may be underestimating the potential of savings by reducing or eliminating other types of claims.

Step back, and challenge yourself to view every line of insurance as a significant tool to enhance productivity. Think about the cost of lost business opportunities, loss in corporate earning power, internal investigations, time lost defending or contesting claims, disruption of usual business operations and relationships, loss of reputation, and the cost of media response and control.

These are just a few examples that easily cross over multiple lines of commercial insurance.

The time has come to expand the focus of the productivity debate beyond workers' compensation. The direct claim costs of workers' compensation have been called the tip of the total cost “iceberg” by some experts.

A similar analogy may apply to other lines once the ultimate cost and uncovered loss of value from those claims become more clearly understood.

Aside from the ultimate-cost debate, financial executives already have a keen understanding of the importance of a multiline strategy. Consider these findings from the survey:

Nearly 90 percent of respondents have combined at least two lines of commercial insurance with one carrier.

Nearly three-quarters of executives say they achieved significant efficiencies (saving at least 4 percent per year) by integrating at least two lines of insurance with one carrier.

General liability and property (two coverages commonly combined in package policies) were cited as the two lines most likely to achieve significant efficiencies when combined with one insurance carrier.

It is clear that most financial executives see the value and efficiency of combining multiple lines of insurance with one carrier. The next big challenge is to more clearly understand the tremendous opportunity for bottom-line productivity savings to be gained from best practices in risk management across all lines of insurance.

Joseph Gilles is president and chief operating officer of Wausau Insurance Companies. To read or download the “2005 Wausau Multiline Productivity Poll,” go to www.wausau.com/poll.

Reproduced from National Underwriter Edition, March 4, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.