Now and then, when skimming through newspapers, we come across reports of a fire or a robbery in a factory or warehouse. Most of us would probably pay scant attention to this news and move on to other topics. But if we owned a manufacturing or a storage facility, such news would be relevant to us. We know that industries or warehouses are generally covered against accidents such as fire, robbery and the like under commercial insurance. However, most people are unaware about the interesting chain of procedures that culminate into the insurer and the customer reaching an agreement to provide coverage to the property.
Usually, the first step in the chain of events is when the insurer gets referrals from brokers or intermediaries about commercial/industrial properties that require coverage. This information is then generally passed on to a risk engineer whose job is to inspect the premises and ascertain the prominent risk exposures and hazards, and the risk control measures employed, such as fire fighting equipment. The risk engineer will then issue a report and suggest methods for improvement of the risk.
Surveys can be done prior to acceptance of risk as mentioned above and subsequently as well, to ensure that risk improvement suggestions given to them by the inspecting engineer have been implemented.
To underwrite any risk, the insurer needs to understand the hazards involved in the risk. Loss minimization and profit are the ultimate goals. From a property risk inspection point of view, (could be industrial or non-industrial type of occupancy), the following areas are looked into broadly and benchmarked with industry standards as well as national and international standards:
- Risk Awareness and management approach towards loss prevention
- Systems of Control (e.g. smoking; standards of cleanliness; housekeeping; waste disposal; etc)
- Maintenance of critical equipment
- Construction of Buildings & Sheds (whether RCC; GI or AC Sheets roofing; Kutcha type; etc)
- Adequacy of Water Supplies for fire-fighting purposes
- Adequacy of Fire Protection Systems and Deployment (Spread)
- Storage arrangements of raw materials, finished products & work-in-process
- Adequate spaces for movement of fire tenders available or not
- Security features available at site and whether commensurate with size & nature of the risk
- Risk location and surrounding exposures; proximity of neighboring risks
- Exposure to natural catastrophe perils including flood, hailstorm, tempest, windstorm, landslide and earthquake
The above list is not exhaustive but gives an indication of the most common areas where concerns can exist.
Inspections may also be done for specific purposes depending on the type of policy covered (e.g. fire, industrial, all risks; machinery breakdown, marine)
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There can be instances where the Risk Engineering team is called out to do specific and specialized risk surveys as well. These can be with a view to improve packing standards in marine or analyze causes of loss following a major accident or even to check the existence of “hot spots” using a thermal imaging camera.
Industry specific standards for housekeeping are recommended to the company as a guideline for maintaining an accident free and clean workplace.
Housekeeping is a challenging task for huge premises and the solution is to follow a checklist of systems and procedures to minimize if not completely avoid the occurrence of accidents.
For example: The '5S Philosophy' system, which is based on five Japanese words that, when translated mean: Sort, Set in order, Shine, Standardise and Sustain.
The implementation of this system aims to eliminate unnecessary items from the workplace, improve order, tidiness and cleanliness to ensure that every object has a home, ensuring that a workable system is in place and most importantly, ensure that these improvements are sustained. Discarding obsolete equipment, removing clutter, demarcating pedestrian routes and introducing non-slip surfaces will increase storage capacity, reduce slipping and tripping hazards. Assigning responsibility to every employee for the cleanliness of their respective work areas is the best way forward.
At the end of the day, implementing such a system ensures noticeable benefits for the company because besides the obvious improvements in housekeeping, the company will make savings as fewer items will be lost and workdays lost due to injury from slipping and tripping accidents will be minimized.
Adhering to systems and procedures will also give a favorable impression customers and visitors that everything is under control.
Though risks are omnipresent and unpredictable, risk inspections act as risk minimization tools basically carried out to understand the nature of risk and the hazards involved in it prior or post writing them in the insurer’s books.
The author is Managing Director, Royal Sundaram Alliance Insurance Co Ltd