What is the purpose of an insurance inspection?
The main purpose of an insurance inspection is to evaluate the facility for the underwriting department. The underwriting department needs to understand the magnitude of risk a facility might pose and quantify that.
In addition to evaluation for the underwriters, insurance visits result in recommendations that are also proposed to improve the situation on site, thus improving the overall quality of the risk.
WHAT INSPECTION CHECKS FOR
When performing an inspection, the loss prevention engineer checks that all fire protection systems and the water supply to feed these systems are in service, operational, in good condition and are able to perform adequately in case of fire event.
The review of existing fixed fire protection systems in place and procedures for prevention is a key element to determine the quality of the risk at the time of the survey.
The different loss estimates, such as the Normal Loss Expectancy and the Maximum Expected Loss evaluations are carefully reviewed to determine if there have been some changes. Changes may have an impact on the calculated insurance premium for the facility.
ROLE OF LOSS PREVENTION ENGINEER
These surveys can serve other purposes, such as evaluating possible changes at the facility which may require modification to the fire protection systems. The role of a loss prevention engineer is not only to report information to the underwriting department, but also to help the facility improve its situation regarding fire prevention and fire protection aspects.
Most of the time, facilities are not aware of the impact that other improvements have on their fire protection systems. They are also often alone when they’re making decisions on what scope of work or what fire protection systems serve their needs best.
If you ask a contractor selling water mist systems how to best protect a diesel generator, he will surely propose a water mist system. We can’t fault the contractor – it may be one solution that works for the issue. But there can be other alternatives, some of which are more reliable. The external point of view and technical knowledge from the Insurance Loss Prevention Engineer can be a valuable point of reference and someone who can provide a lot of value for the Insured party.
This is why, recommendations that come from these surveys can offer real value for the facility. They can better understand where they need to improve and how they can do it. These technical recommendations are discussed and explained during the survey. Hopefully, open lines of communication offers the insured a clear understanding of where they stand and how they can improve. The recommendations are written in a technical but comprehensive language and direct the facility to the best possible options, and help facilitate their needs for contractors.
Sometimes, during these surveys, an unusual situation that requires specific attention may be found. If this creates an additional and unknown more hazardous exposure, this may result as an alert to the underwriter so that he can adapt the insurance coverage and conditions. This may be defined as a SCARE situation, Serious Condition Affecting Risk Evaluation, or a red flag, to alert the underwriters.
A possible situation could be the provision of a new roof assembly that is now fully combustible and may spread the fire to the entire building, or discovering that there is no longer an operable fire pump to adequately supply the existing water based fire protection systems on site.
In short, a survey by an insurance party helps underwriters quantify the risk for a facility, give a chance to review changes to a facility, and provide an opportunity to recommend improvements to a facility owner.
I am Franck Orset, this is MeyerFire University.
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