Importance of risk survey and loss assessment/adjustment in insurance
Risk survey or loss assessment is a specialized class of job or task. A risk surveyor or a loss adjuster is required to be professionally qualified, trained and having technical expertise. In Bangladesh the popular term for risk survey for risks assessment purposes is pre-risk assessment. However; in this article we will discuss on loss assessment and adjustment.
Surveyors may be broadly categorized into the following classes:
- Property Risk Surveyor
- Property Loss Adjuster
- Marine Loss Adjuster
- Marine Cargo Loss Adjuster
Qualities or traits of a surveyor/loss adjuster/loss assessor
- Be independent
- Be impartial
- Follow work ethics
- Follow best market practices
Duties/Function of a Property Risk Surveyor
- Inspection of Property: It includes physical inspection of property or risk
- Dealing with risk management /improvement aspects (if any).
Contents of Risks Inspection Report
Risks surveyor’s report should include the following information:
- Description of the premises(including construction details)
- Situation/location of the premises (congested area, isolated area etc.)
- Occupation (office, factory, store/warehouse etc.)
- Description of neighboring risk/property (Chemical factory, carpentry workshop etc.)
- Housekeeping (whether premises is properly maintained, clean, tidy etc.)
- Fire Extinguishing Appliances (FEAs) available in the premises namely; (a) smoke detectors,(b) fire alarm system,(c) fire hose reels, (d) sprinkler system etc.
- State of the risk (good, bad, poor etc.)
- Risk improvement recommendations (if any)
- Ensure compliance of risk improvement recommendations (through revisiting premises)
Who are property/risk surveyors?
- Large insurance companies may have their in-house risk surveyors.
- Insurance companies hires professional risk surveyors
Loss Assessors/Loss Adjusters
Typically there are two types of claims surveyor’s namely:
- Property Loss Adjuster and
- Marine Loss Surveyor
- Marine Hull Loss Adjuster (General Average Loss Adjuster etc.)
- Marine Cargo Loss Surveyor
A. Property Loss Adjuster
Property loss adjustment is a highly technical job requiring professional qualification, skill and technical expertise.
Property Loss Adjusters are professionally qualified personnel usually having degrees from The Chartered Loss Adjuster (CLA), London. Many of them are also equipped with professional degree from The Chartered Insurance Institute (CII), London. Examples of professional qualifications are ACLA, ACII and FCLA, FCII.
Loss adjusters are generally appointed by insurers for a fee on a case by case basis or retainership basis. They apply their professional knowhow in loss assessment.
Property Loss Adjuster’s report generally contains the following information:
- Policy No.
- Period of insurance
- Date of loss
- Proximate cause of the loss
- Extent of loss
- Salvage aspects (if any)
- Comments on the liability of the insurer
- Prospects of recovery of loss from Third Party
- Photographs of the damaged property
Documentation required for settlement of a property claim
- Copy of policy documentation
- Police Report (In case of theft)
- Fire Brigade/Civil Defence Report (in case of fire)
- All supporting purchase documents (For imports and local purchase)
- All sales documents
- Any other relevant documentation
- Forensic Report (where applicable)
Reporting procedures of a property loss adjuster (in case of fire loss)
Sometimes it may take time for the loss adjuster to prepare the final report in case of large fire losses. In such cases the loss adjuster may report to the insurer of the loss in the following fashion.
- Preliminary Report
- Interim Report and
- Final Report
B. Marine Cargo Loss Surveyor
Insurance companies usually engage the services of a professional marine loss surveyor including Lloyd’s Agents for the purpose of inspect ion of damaged cargo and for assessment of loss.
Marine cargo surveyor’s report generally contains the following information:
- Cause of loss or damage
- Extent of loss or damage
- Prospects of salvage/recovery (if any)
- Any other observation
- Comments on whether loss is covered within the policy terms and conditions
- Photographs of the damaged cargo
C. Lloyd’s Agents
Internationally reputed Lloyd’s marine cargo surveyors’ have representation in almost all countries around the world. They provide their service by undertaking inspection of damaged cargo for a fee and issue survey report with their findings.More often Insurance companies engage their services. But in certain circumstances consignees/ policy holder can also engage the services of Lloyd’s Agents in which case insurance company reimburses surveyor fees to the insured if the claim is admissible and payable under the policy.
Documentation required for settlement of a marine cargo claim (all in original)
- Marine Policy/Certificate
- Bill of Lading (B/L)
- Bill of Entry (B/E)
- Commercial Invoice
- Packing List
- Short Landed/Short Contents Certificate from Port & Customs Authority
- Lloyd’s Agent/Surveyor’s Report
Outsourcing (internal arrangement of Loss Survey Firm
Sometimes the loss assessing firm assigns a particular task to a professional company by way of outsourcing when they do not have in house facility or experts. It may include involving the following:
- Chartered or qualified engineers for inspection of damaged machinery, plant and equipment
- And assessment of loss.
- Chartered Accountant or qualified accountant for examination of books of account of the insured (for verification of claim amount).
Risk survey especially loss assessment or loss adjustment is a technical and complex subject. It is a highly demanding profession worldwide. It requires special skill, competence and technical knowledge. Professional qualification in relevant area is essential. All types of risks inspection add huge values to organization.
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.