working with insurance industry - the c&s companies
TRANSCRIPT
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Working With the Insurance Industry
Linda Stoppacher, CPP, CSP, ARM, ALCM
Acadia Insurance Company
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Parties During Design Phase
• Building Owner
• Code Officials
• Fire Department
• Architects and Design Engineers
It is understood that lives and safety of occupants and responders is of ultimate importance in this presentation. We are, however, going to discuss financial issues
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How Insurance Works
Business Owner
• Needs Insurance
Agent or Broker
• Helps identify needs and priorities, services account
Carriers• Carrier A
• Carrier B
• Carrier C etc.
• Absorbs the loss
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Property Casualty Coverage Types
PropertyBusiness
InterruptionGeneral Liability
Product Liability
Custom or Excess Lines
Commercial Auto
Umbrella and Excess
Worker’s Compensation
Boiler and Machinery
Inland Marine
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The Insurance Carrier
Underwriter
Loss Control
Claims
• Loss Control• Visits Prospective Customer
• Evaluates risks and controls, condition, protection, values, natural hazards
• Provides Opinion to Underwriter
• May Make Recommendations to Improve (or even be able to insure) Risk.
• May Have Regular Service Relationship with Customer
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Rates
• Insurance Services Organization• Verisk
• HPR• Highly Protected Risk
• Generally in Cents per Thousand Dollars of Value
• Reinsurance
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Main Factors in Property Rates
• Construction
• Occupancy
• Public Protection
• Private Protection
• COPe
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Construction
• Consider how it will behave in a fire.
• Consider firefighting operation, whether they are likely to enter or not.
• Consider whether it can be salvaged, and if it is likely to be a complete or partial loss.
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Occupancy
• What is going on inside of the building?
• What are its relative risks to fire?
• Will it impact plans of first responders?
• Combustible load?
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Public Protection
• What is a Public Protection Class?
• Availability of water
• Ease and speed with which water can be accessed
• Capability, distance, and equipment of Fire Department
• Needed Fire Flow• Can have a class 9 building in a
Class 4 town
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Private Protection
• Any systems inside of the building• Sprinklers
• Gaseous agents
• Foam
• Alarm transmission
• Extent of protection
• Testing and reliability
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Exposure
• Generally what the building may be exposed to from the exterior• Rising water
• A neighbor with significantly more hazardous operation
• Wildfire
• Usually smallest factor of COPE
• Pepcon Disaster Example
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Rate Examples
• A $2,000,000 office building made of masonry non combustible construction. Completely protected by adequately designed and supplied sprinkler system, in a Public Protection Class 2.
• Rate may be $.10 per $1,000 in value.
• Hypothetical Premium?
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Rate Examples
• A $2,000,000 restaurant building which is wood frame and not sprinklered. Location is a Public Protection Class 9 area.
• Rate could be $.35-$.50 per $1,000 in value
• Hypothetical Premium could be?
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Compare Rate over Time
• This will be a graph, waiting for one piece of info from an actuary
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Private Protection
• Not always about rate.
• My determine insurability.
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Major Loss Sources
• Water Damage
• Fire
• Wind Damage
• Catastrophe
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Loss Control
• Visits a Risk to learn about operation
• Evaluate Hazards• Storage/warehousing, Flammable liquid use and storage, Machinery, Wood
Dusts, Housekeeping, Electroplating, Quenching, Commercial Cooking…
• Evaluate/confirm construction, condition and appraisal value
• Evaluate private protection• Adequacy of systems, maintenance, extent of protection
• Evaluate public protection and services
• Natural hazards
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Ideal Vs. Reality
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Items needed from survey
Ideally• Hydraulically designed
• Designed for that occupancy
• Alarms to a central station
• Prefire planning with Fire Department which is close by
• Fire pump is exercised
• All testing documentation is in place
• Waterflow test is available
• Code officials involved at time of design
Reality many days• Scheduled system or no placard
• Fifth occupant of 100 year old building
• Isn’t the water gong enough?
• Fire department several miles away, unfamiliar with occupancy
• Fire pump touched once per year by contractor
• No proof of testing
• Having to estimate waterflow
• Inappropriate system features
• Age
• Lack of code enforcement in area
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What to do?
• Sketch and calculate system
• Find water info from town, or estimate from 2” drain
• Make recommendations• Testing• Exercise/test pump• Address age issues
• Think about holistic loss scenario
• Provide best analysis to underwriter and, if necessary, reinsurer
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Situations where you may work with an insurer• Client is building a new structure
or addition• May work with FPE if no code
official
• Pay provide and discuss specs for UNDERWRITING purposes
• May want to know about materials or brands being used
• Interest in Code used in design
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You may work with an insurer when…
• Client wants to make improvements to Protection for better insurance rate• Insurer may provide minimum
requirements for rate reduction
• May provide approval to underwriter that design meets internal (and external) guidelines
• May have to provide documentation to a reinsurer
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May work with an insurer when…
• There has been a loss impacting the fire protection system• Conveying to our claims unit the
need for additional expenses
• Our need to understand when the system will be operational once again
• How to prevent a similar loss in the future
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May encounter an insurer….
• During a fire pump test• Like to witness when possible
• Discuss results with contractor
• Graph and compare to previous years
• Discuss any need to further explore a performance issue and what the next step is
• Discuss exercise schedule
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May Help an Insurer….
• What is this? • Would you interpret this the same way I am?
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How you can help a customer!
• If this is not present, or plans are not on site, ISO can dock your customer in its evaluation, resulting in a higher base rate.
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An Insurer may help you….
• Does your company recognize this standard?
• This is outside the scope of NFPA, therefore would you accept this?
• Is this material or technology acceptable to you?• CPVC
• CLT
• Insulated Sandwich Panels
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Insurance Loss Control as a Career
• Graying Industry
• Traditionally hire people with engineering or highly technical backgrounds
• More colleges are offering Insurance and Risk Management Programs
• Use a variety of codes and standards- DOT, NFPA, FM, OSHA, CPSC, ASHRAE, etc.
• Each day is different
• Can specialize in various lines or industries
• Involved with people
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What are the Main Factors in Property Insurance rateA) Construction, Age, Protection, and Neighborhood
B) Construction, Occupancy, Private Protection, Public Protection and Exposure
C) How long a company has been in business and whether the sprinkler system is wet or dry
D) Industry trends
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What is HPR and how is it used?
A) Highest Premium Ratio, it is used to get the most property rate on a risk.
B) Highly Protected Rate, it allows an insurer to keep rates high
C) Highly Protected Risk, it allows an insurer who is filed to do this to substantially lower a premium rate for an exceptional risk with superior protection systems and features
D) Hourly Premium Regulation, it determines rates for a manufacturer based on hours spent in hazardous activities.
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In the absence of hydraulic information, what might an insurer do?
A)Guess on the sprinkler system’s adequacy
B)Refuse to provide coverage to a company
C)Charge a higher rate
D)Sketch the system and run a hydraulic analysis