Loss-control engineering: risk analytics that deliver real gains

Loss-control Engineering: Risk Analytics That Deliver Real Gains

Three hundred and fifty years ago a great fire devastated London, destroying 10m worth of property ( 1.5bn in today s money). A nationwide charitable collection for distressed Londoners raised a derisory 0.16% of the rebuilding costs (about 2.5 million in today s money). Little wonder that the catastrophe inspired the world s first property insurance policies soon after.

Streamlined risk analytics The rise of advanced loss control engineering (LCE) has seen the objectives of these early experiments in insurance evolve into modern-day best practice. Today, insurance providers and the insured alike are committed to an open and collaborative approach to systems integration. This approach has delivered streamlined risk analytics that permit users to visualise risks and monitor the effects of risk mitigation. In a practical example, the data capture value of a web-based touchscreen system interface can boost data-driven decision-making by remote diagnostics to achieve a reduction in loss ratio and thus a greater accuracy in pricing of risk premiums. To these benefits can be added the recognisable gains of loss prevention and business continuity planning rather than the daunting complexities of loss restoration. Such channels give insurers greater insights into specific systems for technical underwriting and can ensure the mutual transparency of collective risk management to develop strategies that significantly reduce the time for risk assessment and decision-making. In turn, by incorporating such innovations into loss-control services, system integrators can create a truly distinct market differentiation. The rise to prominence of LCE must be seen in the context of a clear trend towards stricter underwriting decisions and claims management from a tougher insurance market that demands more robust processes and systems Robust systems and optimising LCE In England it took a colossal, city-destroying conflagration to get people thinking about better fire-safety measures, so today you can be sure loss control engineering services are now central to the concerns and cooperation of interested parties (both insurance brokers and in-house corporate risk management), especially in the application of LCE principles for deciding on actual, rather than perceived, qualities of a given risk. The rise to prominence of LCE must be seen in the context of a clear trend towards stricter underwriting decisions and claims management from a tougher insurance market that demands more robust processes and systems.

And there is no doubt that one of the upside benefits of LCE is the real value that can be created by optimising predictive risk monitoring by means of smarter remote troubleshooting of systems, enabled by liberating interoperability between intelligent systems whose full potential is so often neglected. Programmed remote diagnostics that interrogate an AFD can, for example, cut out the need for excessively scheduled maintenance intervals In particular, in relation to risk management, this predictive technology can apply equally to an AFD (automatic fire detection and fire alarm system), to the significant benefit of both service providers and end users. As to identifiable value, programmed remote diagnostics that interrogate an AFD can, for example, cut out the need for excessively scheduled maintenance intervals, a measured approach to risk management that harnesses the interconnected intelligence of versatile addressable field devices for a sharp reduction of on-site maintenance costs while delivering a primary LCE objective: the provision of improved protection. Interconnected intelligence for hazard classification In general, insurers specify loss control engineering services to conduct on-site surveys to confirm hazard classification and management controls before an underwriting decision. Following confirmation of insurance cover, LCE services work with the insured s risk management team to assist in controlling and reducing loss costs. Achieving these critical commercial objectives amid the transformation of traditional insurance models due to the revolution in digital technologies, including remote analytics and telematics will require a rethink in the optimisation of loss control information to gain a competitive edge. According to a recent report from a global leader in business process management, the reconfiguration of core loss control processes by eliminating non-core activities (conservatively estimated at 25% of the cost burden), supported by the robust integration of loss control applications ( interface platforms for automated management, including handheld field devices for interpretation of live data in real time) will deliver additional top-line and bottom-line impact to add positive value. Loss control and fire protection As more than three centuries of regulatory developments indicate, protecting domestic and commercial structures from fire has been a central issue in property safeguarding. Fire poses grave risks in terms of safety to occupants, building integrity, business interruption and the economic health of a community.

Consequently, reduction in fire risk has been a priority for society, achieved through our continually improving understanding of all the factors that contribute to fire risk. Insurance companies, too, can no longer expect to insure a facility for an extended time, and thus have less incentive to make an investment in providing ongoing loss control services Foremost, designing and building structures in compliance with building and fire code requirements, and insurance industry guidelines, contributes significantly to the reduction of fire losses, a positive effect confirmed by the downward trend in the number of fire incidents in the UK over more than a decade. Together, loss control engineering and fire protection engineering have their roots in the insurance industry and its specialised actuarial science whose influence on fire systems specifications and safeguards continues to prevail, employing statistics and probability theory to approximate the rate of future claims based on a given risk. On many projects, especially large facilities and industrial buildings, insurance companies would often provide fire protection specifications to the design team early in the process, be involved throughout the design and construction of a building, and provide additional inspection services after the building was occupied and in use. All part of loss control engineering, these activities were viewed by insurance companies as a sound investment. It was considered to be in the insurer s direct interest to protect the building, operations and the insured s business continuity from loss. However, over the last 20 to 25 years the insurance industry s involvement in fire-protection design has decreased. This shift is due, in part, to the modern business environment where both insurance companies and business corporations are continually reorganising. Insurance companies, too, can no longer expect to insure a facility for an extended time, and thus have less incentive to make an investment in providing ongoing loss control services.

So, as insurers cut back on LCE services, it is more important than ever that design professionals recognise the value of the specialised field of fire protection engineering. By working directly with owners, or as an integral part of a design team, fire protection engineers and building code consultants have a greater opportunity to influence a project, to ensure appropriate fire protection features are included at the crucial preliminary design stage, avoiding costly changes or additions later in the construction process. Preventing fire losses has always been comparatively more important to the insured than to the insurer. Although a particular fire loss may not be statistically significant to an insurance company, to the building owner it is not only a financial issue but also impacts on employee morale, access to suppliers and the economic confidence of the community. Over time, an increased understanding of the many factors that contribute to the risk of fire has led to positive developments in the fire protection of commercial structures. Improvements in public fire protection systems and services, as well as increased private use of active or passive systems through fire protection and loss control engineering, has heralded an overall decrease in the cost of fire losses. New intelligent fire systems can deliver significant cost savings and performance An independent study reveals that intelligent fire systems the platform for successful LCE functionality when integrated with BAS (Building Automation Systems) can yield cost savings of up to 25% with, post-installation, continuing savings during the life-cycle of a building s purpose and operation. Increasingly sophisticated predictive monitoring and servicing of fire alarm systems allows potential problems to be resolved before they arise. Access to information from internet-enabled panels at regular intervals or as events occur can also deliver real benefits to both building managers and insurers.

Kentec Taktis A leading example of this cutting-edge technology is Kentec s Taktis Life Safety System Management, which combines the very latest hardware and software to deliver impressive capabilities, including the management of fire and security servicing inspection routines; false fire alarm interrogation and diagnosis; scheduling system maintenance call-outs; a full audit trail for traceability and regulatory compliance; sophisticated network analysis tools. Free download covering legal requirements for responsible persons under the FSO, courtesy of the IOSH, BIFM and USHA approved UK provider of health, safety and environmental information. Key features: A full breakdown of the Regulatory Reform (Fire Safety) Order 2005 The key actions when dealing with fire precautions & protection A complete guide to maintaining procedures and requirements within your organisation.

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