 "Recs" Not An All Or Nothing Proposition By Bob Wasserman |
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"To recommend, or not to recommend," ... that is the question many an underwriter has asked after reading a loss control firm's suggestions for risk improvement. Some underwriters automatically make all listed "recs" to the insured. Others, however, hesitate because they disagree either about the appropriateness of the recommendation itself, or its significance in impacting on the quality of the risk. It might be instructive to discuss the thought process that loss control firms go through in making recommendations so that there can be a better understanding of just why certain types of recs are made and their relative importance. While certain conditions are obvious problems (overloaded electrical outlets, grease-encrusted restaurant hoods, broken or missing stairs, etc.) many recs are more subjective and are based upon the past experience (and experiences) of the particular inspector involved. No inspection company can discover every deficiency a specific risk might have. It can only strive to isolate those that, in its opinion, tend to meaningfully increase the likelihood and/or severity of loss to the insurer. Aside from code violations, one has to look to the more subtle hazards through the eyes of an experienced field person and make such recommendations as that individual deems important. Since underwriting is less a science than an art, and given the fact that underwriters are thinking human beings (just as are the inspectors), it naturally follows that there will be times when recommendations will (and should) be questioned. Any inspection service should welcome this type of feedback since it will ultimately help the firm provide better service to its clients. The important thing to realize is that inspection reports are prepared by individuals whose work will, inevitably, reflect their own opinions and interpretations of conditions seen on site. A survey should deal with aspects of the risk that the underwriter is unable to see for him/herself. While all good inspectors are schooled in the recognition of the most apparent hazards, and will certainly report them, some of the more elusive and subtle conditions ("gray areas") that in his/her opinion could be potential problems, should also be included in the final report. An underwriter who has a problem with, or doesn't understand the thinking behind a particular recommendation should immediately pick up the phone and call the inspection service for clarification.
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By maintaining good communications with their inspection service, underwriters can get more for their money -- both in terms of getting the most out of individual reports via clarification and additional information on recommendations, as well as ensuring that the overall quality of the inspection company's reports improves through the critical review process.
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