Underwriting Insurance Risk Means Understanding Preventable and Unpreventable Losses.

Underwriting Insurance Risk Means Understanding Preventable and Unpreventable Losses.
As a property insurance company underwriter, you owe your living to insurance risk. Without insurance risk, there would be no need for insurance at all. And while you must accept a certain amount of risk that your company shares with each and every property owner client, you’ll continually be involved with a variety of loss prevention efforts.
Lessening Property Insurance Risks
Anything that can be done to lessen preventable property risk exposure is good for both your company and your clients. Of course, not all insurance risk can be prevented but many risks can be identified and steps taken to reduce them. A comprehensive insurance inspection can go a long way in uncovering risk conditions and potential liabilities that could cause future losses and this information can be passed on to the property owner.

You can then either recommend or require that risk mitigation efforts be undertaken as a condition of underwriting or renewing insurance coverage. You can also utilize the data relating to insurance risk exposure presented by your inspector to more accurately price the coverage you offer.

Losses From Preventable Insurance Risks
Many insurance claims are the result of preventable insurance risks and a home insurance inspection can help uncover risks unknown to the homeowner until discovered by an inspector. Here are some examples:

  • Roof Leaks – the roof is a home’s main protection from stormy weather and many preventable claims stem from improper roof maintenance. Homeowners should regularly check for damaged or missing roof shingles, water leaks in the attic, clogged gutters and downspouts.
  • Electrical Fires – combustibles too close to baseboard heaters and improper use of cheap extension cords start lots of fires and are totally preventable.
  • Cooking and Candle Fires – fire damage claims are second only to water claims on home insurance policies and many of them are preventable. Candles should not be left unattended and should be kept out of reach of pets and children. Kitchen cooking should also not be left unattended. Failure to follow the simple tips represent undue risk.
  • Washing Machine Leaks – rubber hoses used on washing machines will eventually dry out, crack and start leaking, flooding your policyholder’s home and often causing water damage. These hoses should be switched out every three years or so. As an alternative, they can be replaced with the metal alternative.

Losses From Unpreventable Risks
Some risks cannot be prevented but the chance of them creating large losses can be decreased by taking certain actions. Consider the following:

  • A house fire can totally destroy a home and some house fires cannot be prevented. An example is when a home is struck by lightning – a peril that is covered by a standard homeowners insurance policy – and burns to the ground. While the lightning strike itself may not be preventable, certain things can be done to minimize the damage done in such a scenario. Lightning rod installation, fire-resistive roof material, early warning detectors installed throughout a home, easy access to fire extinguishers and a monitored fire alarm system are all items that can reduce the risk that all homes face burning down.
  • Home burglaries are an insurance risk also faced by homeowners that can be lessened by installing: strong dead-bolt locks, monitored intrusion alarms on all windows and doors and motion-sensitive exterior lighting. Trim bushes and shrubs around the home to prevent hiding spots, burglar-proof your garage door and don’t hide entry keys outside.

Risk is something that must be understood for accurate underwriting. Unpreventable losses can be minimized and preventable losses can be prevented through proper action. Contact Insurance Risk Services for help in doing both.

We’re delighted to announce that Insurance Risk Services will rebrand to Davies in the near future.

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