A good underwriting report conducted by a professional engineer will add credibility for underwriters and is important for the mandatory disclosure of the known risks. It also assists the underwriter to determine their capacity for the risk i.e. how much of the risk they can accept depending on the loss estimates (Normal Loss Expectancy, NLE and Maximum Foreseeable Loss, MFL) provided. Naturally, the underwriting report will also strongly influence the cost of insurance.
A professional risk engineer can properly assess the effectiveness of fire protection systems such as automatic sprinkler protection, fire pumps and water supplies available and assess fire spread containment measures with fire walls and the like. These considerations have considerable bearing on the loss estimates developed and subsequently the risk acceptability by insurers and their pricing.
Of major interest and importance to underwriters is to gauge management interest in risk management by the client which is reflected with good housekeeping practices, emergency procedures, documented hazard inspections and good controls for hazardous materials and ignition sources.
Generally risk acceptance by insurers is based equally on management interest as well as the overall physical risk evaluation. Management Controls for property risk exposures involve little cost for clients and can be readily adapted for electronic delivery and training purposes.
