Unlocking success: The vital role of comprehensive technical risk information in empowering property underwriters
ArticleMarch 17, 2025
In the world of large and complex property underwriting, it is key to know what you write and write what you know. Uncertainty in the risk quality acts as a significant barrier, decreasing the appetite of underwriters which ultimately leads to hesitancy, conservative estimations and higher premiums or even declined coverage. In this article, Zurich Nordic’s expert Juho Mäkiharju shares how this can be mitigated through the provisions of detailed and accurate risk information via specialized risk engineers.
In recent years the property insurance market has been affected by several shocks, from the pandemic to wars and from large property losses to the development of improved underwriting systems and artificial intelligence. The combination of all this resulted in a hard property insurance market where carriers have invested in underwriting excellence and having focused on profitability. As insurers can now digest more technical risk information with the help of advanced risk modeling systems, underwriters also expect their clients to provide adequate data to assess their specific risks and exposures in order to price them and create a cover that is fit-for-purpose. While market conditions can vary, it is unlikely that the need for more developed and comprehensive risk information will change any time soon.
So, precisely what are the underwriters’ expectations and how can the clients drive their cause? It all depends on the specific industry type, but below you can find the most basic requirements that will help you market your risks.
Risk Engineering Program
It is vital, especially for multinational and heavy industry companies, to have sound risk engineering programs where all business-critical sites are visited regularly, and an opportunity is given to the risk carriers to attend. Depending on the industry and the business criticality of the site, surveys should be conducted every one to three years. This means that for large corporations, there can be dozens of surveys per year. The surveyors should be qualified engineers from reputable companies with knowledge of the specific industry risks and exposures (hint: ask for the CV). It typically also helps to speak the local language and know the local legislation. As a result, the client will receive risk survey and loss prevention reports from each site, which are to be distributed to the insurers and the designated underwriters.
Risk survey and loss prevention reports
At a minimum, the reports need to include up-to-date underwriting information such as general occupancy and process descriptions, main changes from the previous report, natural perils related to location hazards, comprehensive technical specifications of the (automatic) firefighting systems, fire and machinery breakdown loss scenarios (typically estimated maximum loss and probable maximum loss, often referred to as EML and PML, are required), site loss history, applicable risk grading score using surveyor’s methodology, photos, and the issued loss prevention recommendations. For technical risks, such as industries with rotating equipment, heavy emphasis should be on the adequacy of the technical machinery data and related loss scenarios.
Experienced risk engineers know which details are crucial to underwriters, ask the right questions, and write a report that can be later “desktop assessed” by another risk engineer, as in many cases carriers do not have the resources to attend every on-site survey, especially if they are not the lead insurer. The rule of thumb is that the level of information in the report should be comprehensive enough for one to verify the loss scenario assessments based on the available information.
Risk Improvement Follow-up
Roughly one to three months after each on-site survey, it is critical that a follow-up on the recommendations is performed with the local site representatives and the client risk/insurance manager. This can be done either via virtual meetings, insurer platforms or specific spreadsheets. In short, the client will present which recommendations have been implemented, which are in progress, which have been rejected (with reasons) and which have not yet been actioned on. Closing of the completed recommendations is typically done during the next on-site survey to verify the results. An up-to-date summary on the progress should be sent to the underwriters as part of the insurance submission material.
Market Presentation
Annual market presentations are the moments for the client and their insurance broker to shine and present the data gathered by the risk engineers. The lead or account engineer should preferably chip in and present the major findings themselves to create further trust.
Live roadshows where the clients present their companies and their insurance programs make lasting impressions. If live is not possible, virtual meetings are better than nothing. For technical risks where the typical insurance panel consists of several carriers, specific underwriter visits to business-critical mills and factories can also be helpful to paint the picture and market the risk.
To summarize, all internationally operating and heavy industry corporations should have a solid risk engineering program by a reputable service provider in order to work on and improve their overall risk quality and resiliency, but also to benefit their insurance placements. Underwriters are generally willing to be more flexible if they have a good understanding of the risks they are writing. Furthermore, with the help of the risk engineers, the client can present a clear roadmap on how the risk will improve in the foreseeable future. There are several service providers available, and thus benchmarking is key to finding the provider best suited for one’s specific needs.
For more information on how your business could benefit from a comprehensive risk engineering program, and how Zurich can support you, contact Juho Mäkiharju, Underwriter, Property and Engineering Lines at Zurich Nordic.