Intuitive Inspections

Mobile technology, coupled with a rethink of traditional ways of producing inspection reports, can cut significant costs, improve efficiency and speed up turnaround for underwriters and inspectors.

Underwriting is the critical, if cumbersome, lynchpin of the insurance transaction process. Delays, paperwork and requests for information can stretch the vital risk analysis function to days and even weeks for standard clients. While many insurance companies have dedicated significant time and resources to automating systems for distribution and new business, few have looked at perhaps a more obvious piece of the underwriting puzzle: inspections.

In the past, insurers have typically either ordered inspection reports from third-party providers or done them inhouse. In both cases, the formatting and consistency of reports are often inconsistent, while time-consuming re-keying of data from the actual report to an underwriting database system is common. Inspection remains a paper-intensive process that has not benefited from advances in mobile technology and database integration.

Traditional delays

In fact, a typical inspection assignment looks something like this. An underwriter in Toronto requests an inspection report on a commercial policy from a third-party service in Thunder Bay. The property in question is a small commercial plaza. The inspector receives the basic specs for the inspection and visits the site.

As the inspector has done hundreds of times, he notes pertinent information (i.e. square footage, electrical wiring, sprinkler systems, use of property, type of retail stores, etc.) on a notepad, or perhaps laptop computer, makes recommendations and takes several photographs. He then goes back to his office, re-keys some or all of the information, prints off a report, attaches the photos and couriers a package to the insurance company. In many cases, additional copies of reports are made for filing purposes.

The underwriter reviews the report, notes any key recommendations and hands it off to a clerk for re-keying into the insurance company database. This process can take anywhere from three days to three weeks or longer, depending on the size of the risk, the length of the inspection report and the number of recommendations. The delays riddling this traditional inspection process are clear. Inspectors often record information and collect data twice – once on site and again back at the office. A paper-bound inspection routine relies on excessive printing, copying and data, or photo, collation. There is no “once-and-done” reporting of information for inspectors on-site.

Risk quality

Delays also work their way back to the insurer, as underwriters wait for inspection reports to be couriered. In some cases, underwriters need verification of information or more data because of the lack of standard formatting in inspection reports, resulting in a back and forth process between underwriter and inspector. The absence of any integration between inspection agency and company database means more re-keying of information, more delays and, ultimately, higher costs.

More importantly, however, the length of time it takes for inspection reports to be delivered, evaluated and input means that insurers are not really up-to-date on the kind of business they are taking on their books. How good is the business coming through the doors if the inspections show urgent and repeated recommendations? Are some brokers pushing business that consistently produce poor inspection results and potentially higher loss ratios? Right now, most underwriters have to rely on gut feeling to answer these questions.

The inspection process can clearly benefit from a complete overhaul. A new approach should be on-site inspectors with portable technology. Specifically, mobile technology tools are available which allow inspectors to input data into standard report formats – broken down by topics such as file summaries, recommendations, photos, files and letters. Detailed formats and reporting structures take the guesswork out of what specific information is required by various insurance companies.

Inspectors can forward these reports electronically to underwriters or brokers, eliminating costly errors, missing information and clerical re-entry. This standardized information can be fed directly into an insurer’s underwriting database. This alone could reduce costs by hundreds of thousands, if not millions, of dollars for insurance companies.

Just as importantly, this new process can increase the productivity of underwriters. Renewals, updates and recommendations are all much easier to track. Data are sent and stored automatically to underwriting databases, giving underwriters access to key information at the click of a mouse. Underwriters also now have a tool to gauge the kind of business coming in from brokers, based on current inspection reports. This information can be quickly analyzed and summarized in reports to senior management.

The Wired World welcomes your feedback. Contact us, via E-mail at vikki@canadianunderwriter.ca