Three ingredients for a successful insurance inspection
28 june 2019
The insurance market is changing. The days when insurers were prepared to insure companies without too much information and at low prices are a thing of the past. On-site company inspections for material and consequential loss insurance policies of any significance have become the rule rather than the exception.
Insurers are still prepared to insure your company. However, they want to know what they are getting involved with beforehand. That is why you should expect a visit from an inspector if you want to contract an insurance policy of any significance. Feeling stressed? That’s understandable. After all someone will be coming along to conduct an assessment and evaluate you. However, I have seen through experience that the inspection can also offer opportunities, namely a better deal!
Ingredient 1: good coffee
As a prudent business owner, you insure your valuable items. Perish the thought that your industrial building, warehouse and office would be destroyed by fire. Fortunately, there are insurers who want to assume the risk. However, they do not do this as a matter of course. Quite rightly, they want to see how things stand. So, get the coffee ready, as it is becoming more and more common for insurers to send out an inspector to see how things stand for themselves.
Ingredient 2: transparency
What does the inspector want? What will he or she examine and ask you about? What is the best way to provide the information requested? These are all logical questions where it is appropriate to get advice. It all starts with good preparation for the key question. To put it very generally, what risks can be anticipated and how are you going to deal with them? The inspector would like clarity about the relevant facts, such as your business activities, security, the building construction and the materials used on your premises.
After all, Information is a key part of whether an insurer wants to insure you, or to put it another way, whether the insurer is prepared to ‘set aside’ financial resources for a potential payout in the event of a claim. This information can include the location and nature of the building, activities and production processes, and various valuations, but also information about critical machines and suppliers. So, what should you offer the inspector, apart from a good cup of coffee and openness? One thing is essential and that is transparency!
Ingredient 3: willingness to engage in dialogue
How do these visits usually proceed? Generally, they start with an interview and a round of questions. You can use the questions to provide all of the necessary information, with additional explanations from employees if required. Then comes a tour of the buildings and grounds. You take the inspector around the production and storage facilities. Sometimes, this also involves the technical areas and utilities services. Roofs may also be part of the tour. For instance, to examine the risks of water damage or the overhang of fire partitions. This is rounded off with an assessment. The inspector will set out his or her findings and conclusions and will discuss any recommendations where necessary. It often involve costs, the chance of financial loss and any need for investments in fire protection. A good tip is to bring along your colleague who is responsible for finances.
Is that everything? A meeting, answering some questions, a walk around the company and a discussion about the findings? That would be quite a superficial appraisal and a somewhat defensive take on the visit. At the end of the day, it is not just about whether you create the right image of the premises you would like to insure. The visit offers opportunities and you can gain something from it!
Make sure that you do not just provide good information. You should also listen carefully to the questions. What does the inspector consider important, what did he or she ask more questions about and what concerns did the inspector express? Engage in dialogue with the insurer’s representative. Put yourself in the inspector’s shoes and try not to see him or her as being demanding or awkward. Take the new professional attitude of insurers in your stride and above all be aware that inspectors are good at identifying issues that pose or increase risks.
Take the inspection seriously
On balance, I recommend that you treat the inspection particularly seriously and also see it as an opportunity. Prepare in advance and be ready for engaging in an open discussion about the findings. Show what is happening within your organisation, but be self-confident too. Take the reins and be clear about your interests and how you intend to align these with the insurer’s interests.
Would you like to know more about the growing importance of inspections? Riskonet has put together a handy white paper on this subject that contains more information on matters such as how you can prepare properly for an inspection. The white paper discusses all aspects of the inspection and show you which documents you can prepare. The white paper also contains a list of key concepts and several handy checklists which will help you to prepare properly for the visit.
If you have any further questions such as about how to identify the risks in your company or about potential safety issues, or if you as a manager, director or business owner would like to prepare well for the inspection, give Riskonet a call.