Underwriting a risk doesn’t end with the review of an application or even after the risk is quoted and bound.
Even if the results show up after a policy is in effect, they directly impact profitability and loss potential. The inspection allows you the opportunity to take corrective actions through recommendations, policy endorsements or exclusions, or even cancellation of a policy, if necessary.
Years ago, insurance agents visited their clients. They visited their homes, frequented their businesses, and participated in their communities. Today, an agent is rarely familiar with a risk. Most business is done over the phone or by email.
Information is gathered via the Internet, drones, and cloud-based technology. Personal interaction with insureds is becoming a lost art.
The review of the inspection is the agent’s responsibility and should be done on a priority basis, with a critical eye toward mitigating risks. Even if the inspector doesn’t cite something as a recommendation, the agent should still be identifying conditions or exposures. Employing a critical analysis is key to addressing all recommendations as well as discrepancies noted from the original application and risk exposures.
Photos are a key element of any inspection. Clear, sharp photos of the structure and the business operations, including interior/exterior shots of all visible sides of the building, will allow you to assess the property, learn how well it’s maintained, and spot any adverse exposures.
Photos are also a good way to confirm the utilities such as heating systems, electrical panels, and any protective safeguards, such as CSA certification and sprinkler systems. Photos can also confirm if building updates have been done or need to be completed.
Roofs and leaking issues are a big source of damage and large loss payouts. An inspection should contain several clear photos of the roof’s condition. Commercial roof losses tend to be more significant, so it is valid to expect the inspector to access the roof, usually from the building’s interior.
If it is a pitched roof, the inspector doesn’t need to climb onto it. Cameras today have great zoom features, and the inspector can provide you with some close-ups, showing shingle or tile conditions as well as any issues that exist with the fascia, soffits, or the gutter system.
If a roof is inaccessible, the inspector should share their opinion on the roof’s condition based on observation and have a discussion with the insured.
Here are some tips to improve the effectiveness of your inspection:
Inspections sometimes uncover material discrepancies. The “material” is the relevancy of facts, information, or details about a risk, and a “discrepancy” occurs when the facts, information, or details differ. Sometimes, a material discrepancy needs to be addressed immediately.
When conducting a policy review and reviewing an inspection, it is crucial to ensure the risk doesn’t have prohibited exposures and that it complies with the guidelines.
A material discrepancy impacts the risk’s acceptability, coverage, and/or pricing. When you find a discrepancy, ask these questions:
For inspection recommendations or issues you catch in your review, consider taking the following actions:
Diligent underwriting, gathering good information, critically reviewing inspections, pricing adequately for the risk and exposures, and following up on recommendations and discrepancies, helps you build a strong foundation for profitability.
Trust your instincts and ask questions. When something doesn’t feel right, it likely isn’t. Taking a stand and addressing your concerns can make a difference in solving a minor problem that might otherwise lead to a critical injury or serious damage.
We aren’t just writing insurance, we’re protecting people’s properties, businesses, and families. Let’s hold this noble purpose in the proper spirit and underwrite diligently for our insureds’ sake.