The job of insurance and loss control inspection professionals is not always a popular one. Field inspectors are often confronted with opposition from homeowners or business owners who may not fully understand the role of inspections and Loss Costs in the insurance underwriting process.
Many insureds believe that their insurance company is sending someone to check up on them or to look for reasons to raise their rates.
Unfortunately, insurance companies and agents struggle with the perception, by some, that the industry as a whole is untrustworthy and devious. As in any industry, there are marginal operators, but the function of insurance is to protect clients from the potentially crippling costs of a covered loss.
Field inspections provide the most accurate account of the conditions on and around the property and how the space is being used from the insurer’s perspective. A client can provide a description of the building and daily operations but is not a trained professional and may not know what to specifically look for.
The role and calculation methods of Loss Costs are also often misunderstood by the insured. Many think of it as a subjective number, which to some extent seems arbitrary, rather than a mathematical equation. Loss Cost calculations are based on a formulated schedule submitted to and approved by the Office of the Insurance Commissioner at the state level. It operates much like a point system, by which infractions or deficiencies are assigned a numerical value. Because the Loss Cost does not include the insurance company’s expense and profit loading, a field inspector often does not know whether an inspection will raise or lower the insured’s rates.
Many insurance agents choose to be proactive and take the time to explain the process to their clients. This not only builds trust but also provides a base understanding for future discussions, such as the need for a loss control inspection. The better informed your clients are about the process, the more likely they will be to work with you and ensure that their rates are an accurate reflection of their home and/or business.