Private Equity Firm Improves Go Forward Insurance Terms Through Risk Management Strategy

How BKS Partners Helped a Private Equity Firm Improve Go Forward Insurance Terms With a Well Thought Out Risk Management Strategy.

Background and Context

A healthcare focused private equity firm engaged BKS to provide risk management and insurance due diligence on a prospective acquisition. The target healthcare organization had incurred a number of liability claims that were a result of sub-par risk management practices. BKS’ due diligence uncovered a deviation from best practices that lead to unnecessarily high claims volume. In addition, the outstanding claims were over reserved. All these factors were inflating the budget for go forward insurance pricing by $80,000.

Solutions and Tactics​

BKS’ Risk Mitigation Services team suggested process improvements that appeased the underwriter concerns. With the use of benchmarking coupled with risk analysis strategies, we substantiated a limit increase. BKS conveyed the business case for lowering the reserves to the carrier’s claims team via a conference call.

Value and Lessons

  • $80,000 in cash flow improvement was achieved by keeping the insurance costs flat.
  • BKS was able to help the client create $5 million in additional balance sheet protection.
  • The client’s loss ratio was reduced meaningfully, which dramatically improved the terms and conditions.

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