A: The Insurance Industry operates on the Principle of Indemnity; in exchange for the premium paid, Insurers are agreeing to restore policyholders’ financial position should an insured event, for example a property fire or personal injury, occur. In order for this to be profitable for Insurers, it is essential that their operating costs combined with the total value of claims payouts does not exceed the premiums collected.

One way in which this can be achieved is through risk surveying, a process in which Insurers or subcontracted consultants assess a variety of physical elements, such as building construction detail and the presence of alarm systems, as well as management practices taking place. Although some of this information may be requested by the Insurer at the time of policy inception, customers may not always have access to this and can’t be expected to be experts in all of the relevant areas so may make mistakes during disclosure. A trained Risk Surveyor has a broad knowledge of the risk factors, hazards and perils that have potential to cause a claim, and so can help to provide a clearer idea of the true risk that a property presents to an Insurer. Furthermore, they are able to identify suitable solutions that help to mitigate any identified issues, reducing risk to both the Insurer and Policyholder.

Often, the first time a Policyholder becomes aware of a Risk Survey is when they receive a phonecall or email from their Insurer or Insurance Broker. Even the most comprehensive initial contact can leave them unsure about what is to come - for a full description, see the FAQ section of this website - and it’s easy for the presence of a surveyor to feel like an intrusion on business operations or an agent sent to surveil your premises in order to reprimand you. However, whilst surveyors are trying to prevent losses for their employers, their presence is also an opportunity for Policyholders to gain guidance on ways to protect their business from reputationally damaging losses that can prove catastrophic - the UK Government estimates that half of business that experience a significant claim and have no recovery plan in place/risk awareness fail in the following year. Visits may also help to identify shortcomings with regards to legislative compliance, protecting Policyholders from possible legal action. Insurance surveys are therefore a mutually beneficial process.

It should be pointed out that Insurance Surveys are not usually in response to the Insured doing something wrong and are not meant to be punitive. They can however be in response to repeat or large claims.

A: Insurance Surveys are largely comprised of three parts:

1) The Insurance Surveyor will typically start by requesting a sit-down meeting to discuss predetermined questions regarding potential hazards (sometimes referred to as ‘risk factors’) at your premises. The exact questions vary by Insurer and the cover in place (e.g. property only, liability, business interruption etc) but there are general areas that Insurers will focus on including planned preventative maintenance (PPM) schedules, building construction and systems, such as automatic fire detection, in place.

During this stage, the Surveyor is likely to ask to see documentary evidence such as electrical fixed wiring inspection certificates (formally known as ‘electrical installation condition reports’ or EICRs), risk assessments or in the case of business interruption, business continuity plans. Generally, it is advisable to have as much documentary evidence available and organised on the day as this can expedite the survey and avoid the need to provide this at a later date; a helpful Surveyor will typically provide a list of required information before their visit.

2) The Surveyor will then undertake a visual inspection of the premises, essentially hazard spotting. Depending on the size of your premises, they may request to see all of the building(s) or focus their attention to higher hazard areas such as plant rooms, kitchens etc. They will need to be accompanied during this visit so that they can ask any further questions and inform you of any hazards that they spot. It may be tempting to steer Surveyors away from ‘problem areas’ such as chemical stores, plant rooms etc, however remember the surveyor is trying to help you reduce your

3) A brief summary discussion at the end of the visit to provide their general view of the risk profile presented, and any ‘Risk Improvements’ that will be raised - see below for further details on these.

A: Absolutely, and I would strongly recommend this. As descrbed above, it’s best to have as much relevant documentation available for the Surveyor either in advance of their visit (for example, sent by email) or for them to access on the day. It may also be worth touring your premises before their visit so that you can anticipate or rectify any potential issues.

Finally, consider who might be best placed to accompany the surveyor during the visit - it’s quite possible multiple people will be needed the visit, covering different areas such as building maintenance, staff training and company accounts. Try to engage with these colleagues early and make sure that they can be available on the day; not everyone will be required for the whole visit, but their input will likely be invaluable

A: Risk Improvements are specific actions identified by Risk Surveyors that may help to reduce the potential for or magnitude of a loss at your premises. These may require physical action, such as improved firestopping or more fire extinguishers, or be behavioural such as improving staff training. Time limits are given for completion of Risk Improvements and these are usually related to the complexity or cost of the solution. Broadly speaking, Insurers classify Risk Improvements as ‘mandatory’ or ‘best practice’. Best practice risk improvements are usually ‘nice to have’ solutions and can be seen as advisory measures that an Insurer is unlikely to insist upon, while mandatory risk improvements will most likely need to be completed. This is because the Surveyor perceives these hazards as presenting a tangible increased risk of a loss at the premises, breach of policy terms or as a contravention of regulations.

Failure to complete Risk Improvements can result in additional terms being applied to your policy, cover being reduced or in extreme cases, Insurers terminating cover/refusing to offer renewal terms.

A: If your Insurer is requesting a visit to your premises, it is likely that your policy has a specific condition stipulating that you may be subject to an Insurance Survey. Indeed, for some policies, a survey is part of the terms for renewal.

It is best to check your policy wording for your specific obligations.

A: In my experience, it is definitely a mutually beneficial experience (although I would say that given my job!). In many respects, a visit by an Insurance Surveyor is a form of free consultancy; an expert is visiting your premises and helping you to remain compliant with your insurance policy (essential should you need to claim), complaint with the law AND helping to reduce the potential of a loss at your premises.

I am sometimes asked by Policyholders as to why they should bother to reduce risk at their premises - afterall, if a loss occurs, they have insurance to cover that right? The financial cost of a loss is only part of the story however, and Chesire Fire & Rescue Service advise that following a serious fire:

• 25% of businesses never re-open.

• 80% of companies who don’t recover in a month are likely to go out of business.

• 75%of businesses without Business Continuity plans fail within 3 years.

Insurance claims can be protracted affairs, during which time your business may be unable to operate. Furthermore, events leading to a claim can cause intangible reputational damage through perceived poor management, potentially resulting in a loss of business.

Finally, protecting your workforce and visitors to your premises is not only the morally correct thing to do, but avoids HSE investigations and legal action which again can be costly and potentially fatal for an organisation.