Insurance Loss Control Inspections - Optimising Risk Assessment

Insurance carriers spend hundreds of millions on inspection programs each year. However, researches report that 75% of insurance loss control inspections bring no actionable information to optimise losses. These numbers point that something is being handled wrong in the inspection management process. This is why inspection carriers are looking for inspection optimization strategies that can improve the risk assessment and reduce the costs of the inspection program. So how can we build up a scenario where insurance loss control inspections are bringing more value without being too expensive?

Bringing value with insurance loss control inspections

When we speak of efficiency in inspection management, mentioning digital transformation is inevitable. A lot of companies, including insurance carriers, are sticking to the old fashion pen and paper inspection model. But performing digital insurance inspections and improving the quality of the process is not a guarantee for efficiency. The digital transformation start with changing the workflow but ends with the way of thinking.

Changing they way of thinking in risk assessment

The performing of risk assessment is a process based on on-site field inspections. The goal of field inspections is to gather data, assess risk factors, record conditions for hazards or other variables that may increase the insurance loss potential. Controlling the loss potential is not very efficient when only general risk factors – like age and value – are used as risk indicators. This is where the new thinking is required to come at play.

Many large insurance carriers spend up to 3 % of their annual budgets on field inspections. Also many of them are outsourcing this process so that they can achieve cost optimisation. In other words optimizing costs of field inspections is definitely a priority.
A few years ago MSB reviewed approximately 2 million field inspection projects for insurance carriers. According to their findings only 25% of the inspections were bringing back actionable information. It means that only 25% of the information helped carriers to actually mitigate a risk by taking an action.

Data suggests that the insurance loss control inspections are tightly associated with traditional guidelines like age and value that are not always on a risk-specific basis. Looking at the 25 percent from the MSB review statistic, we can assume that the industry is spending hundreds of millions per year for inspections that are not bringing much valuable actionable information.

Optimising insurance loss control inspection programs

It all starts with the use of proper data. The detailed and pre-defined inspection checklists that aim to identify specific risks are the key to achieve this. The adoption of inspection management platform, designed for the use of insurance loss control programs is a good starting point towards optimisation. Such inspection platform must be able to provide automated risk assessment based on the data that is being gathered.

Adopting the right inspection management solution can be the key to solving the inspection optimisation problem of insurance loss control programs.

How to implement insurance loss control inspection program?

The key word here is configurability. Your need to optimise loss control inspections? Good. Then aim for a configurable inspection management software. There are hundreds of kinds of risks and inspection models. The inspection software must be able to solve this problem by offering a configurable solution designed for the specific needs of the insurance company. That’s why insurance carriers need proof-of-concept that will allow them to test if the risk-specific inspection approach can actually deliver more valuable data.

How proof-of-concept helps you decide?

By projecting a demo environment designed for specific inspection programs, insurance carriers can test first-hand how the new way of thinking can work for them. This is an important insight that can help them decide if they want to put their money on specific inspection loss control software. Are you ready to change your insurance loss control inspection program? Then contact us.