Cost allocation. Many enterprises around the globe rely upon it to evenly distribute topside operational costs to operating units, divisions, and manufacturing locations. They typically include both direct and indirect expenses. Direct costs can be tied to specific manufacturing or service production activities and can include such things as employee salaries, material costs, and supply expenses. Indirect costs usually cannot be tied to specific business processes and are shared across all organizational entities. These can include shared service administrative expenses, utility fees, and allocated overhead costs.
Cost allocation models will usually include the Cost of Risk (COR). COR can be a hybrid cost including both direct and indirect expenses. No one COR allocation model fits all, as they depend upon the operating environment, industry requirements, and insurance program structures. Other factors may include geographical location, incentive compensation programs, or corporate structure. And they can also include exposure values that help COR models refine their calculations by including items specific to a business line operation, such as Key Performance Indicators (KPIs).
Success factors for COR allocation blueprints should be straightforward and easy to apply. If managed correctly, they will ensure that the programs are viewed in a positive light by employees as they engage with the model components. These factors could include:
- Direct alignment with risk strategy goals and desired behaviors.
- Equitable allocation model impact distribution across all organizational elements.
- Effective change management processes to rapidly meet new challenges.
- Inclusion of all components covering the Total Cost of Risk (TCOR) spectrum.
- Minimal program complexity and administrative overhead.
Prevailing risk management requirements demand accessible computing technologies that include traditional core risk management information system (RMIS) feature sets as well as additional tools that meet a wide array of data integration needs. With round-the-clock data flows and heterogeneous information sources, how do you pull all of your risk data together to support COR allocations? Do you have the right tools for the job? Have you ever thought about integrating all of the relevant data impacting your allocation programs and strategies into your RMIS tools?
We have. At Gallagher Bassett, we are always thinking about how to merge our claims expertise, intellectual capital, and computing technologies with our award-winning LUMINOS RMIS product suite. Our goal is to continually evaluate client, carrier, and broker risk data-management requirements to ensure that we successfully deliver the most robust RMIS product suite available in the bundled TPA marketplace.
Through our partnership with Origami Risk, our extensive list of LUMINOS Expanded Services can simplify the collection and analysis of disparate data sets with a single information repository. Utilizing our COR allocation option could provide your company with the tools needed to successfully manage your allocation calculations and information distribution.
Starting with loss and claims experience, specific per claim charges over a dollar total-incurred threshold could be easily managed in our LUMINOS RMIS product. You could also capture performance-based metrics, such as injured worker return-to-work statistics, managed care PPO utilization numbers, and claim counts. You could input OSHA recordable totals and insurance premium dollars into your model as well. And how about dropping in client-defined exposure values specific to an operating environment? Headcount totals, business unit sales dollars, and miles driven by applicable vehicle fleets can all be managed with our LUMINOS RMIS allocation module, supporting easy access to diverse claim information sets that all factor into your TCOR conversations, decisions, and action plans.
So, go ahead. Think about it. What could you do with an exceptional RMIS product? What if it was bundled together in your TPA claims administration program? Would your daily work flows change and improve if all of the allocation model data was available in electronic format within your RMIS platform?
Having a complete view of all the risk management program information impacting your TCOR really is smart business. And utilizing our LUMINOS COR allocation Expanded Service features is also a great value proposition for your organization. Are you ready to work together to take your RMIS tools to The NEXT Level? Interested in learning more about our LUMINOS COR allocation offering or any of our Expanded Service options available to Gallagher Bassett clients through our RMIS product suite? We would be delighted to talk with you.
Please engage a member of our Sales or Client Service teams, or contact Jennifer Turner, SVP RMIS Solutions, at email@example.com.