When your company pays more for insurance next year, what will be the reason?
Finance might say it’s a market correction. Legal might trace it to a claim. But the actual source might sit in the most familiar place: a hire that slipped through with a blind spot in their background check.
It’s not that the wrong checks were done. It’s that they weren’t deep enough. And the cost of that decision? It doesn’t show up during onboarding. It shows up months later, quietly, in your premium.
Most organisations don’t trace that cost back to the source. But the ones that do? They’ve started adjusting their hiring process, not to be cautious, but to be accountable.
What actually causes insurance premiums to rise?
Insurers assess risk based on your track record. That includes:
- Claims filed under professional indemnity, D&O, or cyber liability policies
- Workplace incidents that result in injury or legal review
- Reputational damage that puts your public exposure or compliance posture at risk
- Employee-linked events that show gaps in internal controls
What’s often missed is that a large share of these events stem from individual behaviour, not major systemic failure.
- A finance manager bypasses internal controls.
- A sales lead misrepresents contract terms.
- A tech employee uploads sensitive code to a personal repo.
- A middle manager faces misconduct allegations after promotion.
These are not rare edge cases. They’re the exact incidents that drive claims, and claims drive cost.
But when renewal time comes, finance adjusts. Legal tightens wording. And HR? Often isn’t even looped in.
The missing link in the internal loop
One of the reasons HR rarely sees the connection is structural. Finance owns the premiums. Legal manages disputes. HR handles hiring. When something goes wrong, it’s investigated, resolved, and filed. What doesn’t usually happen? A review of whether the right background checks could have prevented the exposure in the first place.
That disconnect means the same scope gets used over and over, even when roles evolve or risks increase. The screening may be well executed, but still misaligned with what the role demands.
The hires that quietly increase your risk profile
You might expect only senior executives to influence insurance. But the reality is broader. Roles that carry access, exposure, or external authority often have outsized impact.
A finance controller negotiating contracts, a project manager handling third-party vendors, or a customer success lead managing high-stakes relationships, if their decisions or conduct result in claims or reputational stress, the cost gets felt at renewal.
None of these scenarios require intentional wrongdoing. Sometimes it’s poor judgment or a repeated pattern. But if no one looked for that pattern during hiring, the risk is baked in.
What you can do differently, before it gets expensive
This isn’t about more checks for every role. It’s about smarter decisions where it counts. Here are ways to tighten that link between hiring and risk mitigation.
Start with a review – not of incidents, but of the roles
Look at the types of roles that tend to create exposure. Don’t just focus on title or seniority. Focus on risk surface. If a mistake in this role could trigger a legal or reputational issue, the screening needs to reflect that.
This is where many teams start adjusting their scope, not across the board, but for targeted categories. Think finance, procurement, client-facing leads, and data handlers.
Stop assuming what you’re screening is enough
Even mature hiring processes fall into the “we’ve always done it this way” trap. If your current checks include only identity, education, employment, and criminal history, you’re missing risk signals that insurers actually care about.
Civil litigation, sanctions, PEP status, and adverse media are often excluded unless explicitly requested, and they’re where reputational and compliance issues are most likely to surface.
How to Avoid Insurance Premium Impacted by Employee Incidents
Work closely with finance and legal, not just when a claim happens, but before.
Ask questions like:
- Have any employee-related events driven cost increases?
- Were those incidents preventable with better pre-hire insight?
- What do we need to change about our screening scope based on actual exposure?
This conversation shifts screening from “compliance exercise” to “risk management tool.”
Build a feedback loop into your incident reviews
When something goes wrong, a settlement, a dispute, or even a quiet internal issue, treat it as an opportunity to review the original hiring decision.
- Did we screen for the right factors?
- Was anything flagged but downplayed?
- Did the background check match the real risk of the role?
You’re not trying to assign blame, you’re trying to close the gap.
Make background checks a live part of your insurance strategy
This may be the most overlooked step. Aligning your hiring process with your insurance profile isn’t about ticking more boxes, it’s about protecting what you already have.
Many organisations now treat enhanced screening as an investment in policy stability. It reduces claims, improves internal controls, and demonstrates seriousness to insurers when risk is assessed.
Where AMS Inform fits in
At AMS Inform, we help HR leaders move beyond default background checks.
That includes:
- Role-based verification scope tailored to actual exposure
- Civil, sanctions, adverse media, and reputational scans built for early risk detection
- Global coverage with fast turnaround and clear summaries
- Flexible screening packages that align with both policy and business context
If you’re thinking about how to reduce hiring-related exposure and protect your insurance position before the next cycle, we’re ready to talk. Contact us here.
