Fire Loss – Role and Responsibilities of Surveyors/Loss Assessors”
Fire insurance is a common and one of the oldest forms of insurance. It comes under the category of property insurance. Fire insurance is purchased to protect property against loss or damage by fire and special or allied perils.
Who can purchase fire insurance?
Fire insurance can be purchased by domestic households, business enterprises etc.
Qualification/Experience of surveyors/loss assessors (in bold)
Survey or loss assessment of a fire is a complex and technical job. It requires professionally qualified, experienced and trained personnel.
Definition of fire
In order to make the insurer liable to pay losses under a fire insurance contract, the insured must satisfy two conditions namely:
1. There should be actual fire or ignition and
2. The fire must be accidental or fortuitous
Definition of ignition
Fire policy stipulates that fire loss or damage has to be occasioned by ignition. This means that loss or damage must be either by ignition of the article or property. In other words the damage should be caused by fire. Loss or damage caused by excessive natural heat cannot be construed as loss or damage fire.
Types of fire insurance
There are two types of property insurance covering fire namely:
1. Fire and named perils or allied perils and
2. Industrial All Risks or Property All Risks
Fire loss surveyor/loss assessor should be :
1. Independent in their work
They should follow :
1. Work ethics
2. Best market practices
Responsibilities of a surveyor/loss assessor
The surveyor or loss assessor has the following responsibilities:
A. Loss inspection/investigation
B. Loss assessment
A. Loss inspection/investigation
Loss inspection/investigation should include the following :
1. Cause of fire – whether the proximate cause of the fire is explosion, earthquake (where applicable), riots, strikes, malicious damage etc.
2. Whether the cause of the fire is arson – an element of moral hazard associated with the criminal intent of the insured and/or his agent to set fire deliberately to property – an exclusion under a fire policy.
3. Whether the policy was in force at the time of fire.
4. Whether the fire originated in the insured premises or from a neighbour’s premises.
5. prospect of recovery from a third party.
6. Whether policy conditions and warranties have been met.
7. Whether the property damaged is the same as those insured under the policy (i.e. building, stock, machinery etc.).
8. Whether the risk address of the premises described in the policy is the same as the premises where fire broke out (i.e. office, shop, warehouse, factory etc.).
9. Whether contribution applies (in case of more than one policy on the property damaged).
B. Loss assessment
Loss assessment should take into account the following aspects :
1. Case of under insurance or over insurance – “Over insurance is as bad as under insurance and both should be guarded against”.
2. Disposal of salvage
3. Surveyor should also take into account various unwritten risks other than fire namely :
(a) Damage caused to property by water during extinguishing of fire by fire brigade
(b) Damage caused to property by smoke due to fire
(c) Damage to gate, boundary walls, fences etc. caused by fire brigade while gaining entry into the site of the fire.
Surveyor needs the following documentation at the start of work
1, Copy of completed claim form
2. Copy of policy documentation
Types of survey report :
Sometimes it may take longer for the surveyor to prepare a final report due to various reasons. In such a situation surveyor may issue the following types of reports:
1. Preliminary report
2. Interim report and
3. Final report
Surveyor’s report should include the following information :
1. Policy no.
2. Period of insurance
3. Sums insured
4. date of loss
5. cause of loss
6. Any other relevant information
7. Photographs of the damaged property
Documentation required for settlement of a fire claim :
1. Fire Brigade Report
2. All supporting purchase vouchers (for imports and local purchase)
3. All sales vouchers
4. Stock record
5. Audit report
6. Forensic report (where applicable)
7. Pre-inspection report
8. Other relevant documentation
On Account Payment
Sometimes it may be necessary for surveyors to recommend on account payment which may be adjusted from the final payment.
In such a situation surveyors must justify their recommendations.
Surveyors should clearly state in their report about salvage disposal.
Outsourcing of Services
Because of lack of in-house facility, a survey firm may outsource the following tasks:
1. Hire an engineering firm to inspect damaged machinery and equipment and assess the quantum of loss.
2. Hire a qualified and professional accountant to examine the books of account of the insured.
Final report issued by surveyor comes with recommendations for settlement of the claim. Surveyor may discuss final settlement with insurer, get their agreement and send Discharge Receipt and Subrogation Letter to the insured for doing their needful.
After receiving the said documentation duly executed by the insured, surveyor then sends them back to insurer to prepare cheque in the name of the insured bringing the matter to a close.
Fire losses should be settled in a fair and equitable manner. Surveyors/Loss assessors have an important and significant role to play in this regard.
They should perform their responsibilities in a thoroughly professional manner.
They should be independent and impartial in their work. They should not get influenced or overpowered by temptation from any quarters.
Mr. Haque was brought up and educated in Dhaka. He obtained his master’s degree with honours in Biochemistry from University of Dhaka (DU). He spent nearly four decades in Dubai (UAE) working for several multinational insurance companies in various capacities. He obtained his Fellowship (FCII) from The Chartered Insurance Institute (CII), London, Associateship (AIRM) from The Institute of Risk Management (IRM), London, Associateship (ACIArb) from The Chartered Institute of Arbitrators (CIArb), London. He has authored several books on insurance which have been acclaimed both at home and abroad. He contributes regularly on insurance matters in various online insurance news portals and is a founder General Secretary of Bangladesh Insurance Professionals Society (BIPS). Presently Mr. Haque is serving as the Director of Sadharan Bima Corporation, Dhaka.