Propelling Risk Management Success through Pilot Programs

Rapidly growing technology in risk management and loss reduction solutions is creating tremendous opportunities for business owners. As insurance carriers attempt to identify valuable loss-reducing technology, numerous pilot programs are being offered to their policyholders.

Pilot programs, otherwise known as proof of concept programs, offer opportunities to gain operational knowledge in areas such as:

  • Augmented and virtual reality
  • Building information management
  • Drones
  • Machine learning
  • Sensor technology
  • Telematics
  • Visual learning

Defining pilot programs

Pilot programs are defined as small-scale experimental programs designed to manage risk, validate benefits, and introduce change associated with emerging risk management technologies. Insurance carriers either share the cost of the program with participants, or support it in full. The experimental programs strive to:

  • Evaluate feasibility in real-world applications
  • Determine administration and management requirements
  • Identify cost of use
  • Contrast actual performance and stated performance
  • Validate loss reduction potential
  • Establish scalability potential

Feedback from policyholders who participate in pilot programs is vital in determining the feasibility of a large-scale project. Large-scale projects are implemented only if they can be designed to ensure the desired benefits are realized by everyone in the commercial insurance chain. Often, pilot programs are necessary to uncover details in the full design and implementation of a project.

Benefits of participation

Numerous benefits can be participating companies for little to no cost.

Participants gain knowledge of leading technologies that can enhance future business decisions. Prior to participation in a pilot program, groups are often defined as lagging indicators. The pilot program experience enhances the understanding of proactive risk management solutions, which changes the culture of the organization to proactive-based risk management.

Policyholders participating in proof of concept programs have a deeper understanding of current and future technology. Their skills using an existing technology may improve, or they can acquire new skills using a technology they were previously unaware of. Implementing new technology into policyholders’ work also provides firsthand knowledge of the technology’s capabilities, operational experiences, operations expenses, worker acceptance rate, and potential loss reduction.

Deciding if a pilot program is right for you

As the policyholder’s trusted advisor, the risk management consultant is crucial in guiding the customer through the decision of whether to participate in a pilot program. Several critical characteristics must be considered in the decision.

The most important factors impacting the success of a pilot program is management commitment and desire to support it. With proper support, the inherent obstacles of emerging technologies can be overcome. Without it, the project is almost destined to fail. In addition, the policyholder should have a specific problem that the program technology will solve. A solution without a problem generally loses support quickly. Finally, management must be willing to recognize the technology may fail to perform as advertised. Advise clients that a pilot program can be successful despite the failure of technology. These successes include business operation insights, worker adaptability to technology, or a shift in workplace culture.

By Dave Galbraith, MS, AIM, CSP
Amerisure AVP of Risk Management, Risk Management Technical Lead

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