The Art of Home Inspection

Picture, if you will, the following scenarios. Insurance companies: Have you ever received a claim that could have been mitigated, or may have never happened at all, had the property been inspected? Or maybe it was inspected, but you were not able to act on information from the inspection report soon enough, and then a claim occurred?

Brokers: How many times has an insured called you, concerned that the inspector who is at their doorstep might find something that could result in higher premiums? Or perhaps you have experienced situations in which the policyholder gave you less than 100% disclosure of potential hazards? Granted, in some cases, policyholders may not even know to disclose particular information that could be considered a risk.

Inspection vendors: How many times have you received inspection orders with unclear instructions or nearly impossible turnaround times? Are you familiar with all the insurance companies’ business rules and requirements, and how each one uses information from inspection reports to underwrite their policies?

These are all stereotypical examples. But they demonstrate how property inspections can have a huge impact on the insurance industry.

THE INDUSTRY

Traditionally, property insurance carriers inspect homes and buildings with select characteristics to determine risks or hazards, prompt underwriting actions and establish insurance-to-value amounts. Home inspections can occur on 20% to 100% of insurers’ new and existing books of business, depending on the carrier’s own business rules. Inspections are typically carried out by multiple inspection vendors that work for the carrier.

Managing multiple vendors, keeping track of thousands of inspections, and reviewing and analyzing reports that originate from numerous systems has routinely challenged the integrity and organization of the property inspection and resulting underwriting process.

How does your company’s inspection process measure up? Results from property inspections improve with the right technology and process. So how can you be sure that the results from your property inspection process are as effective as possible?

CHALLENGES

In Canada, inspections are becoming more of an every day occurrence for insurance companies. Inspections are happening both before a policy is written and once a policy is already in force. Unfortunately, in most cases, inspections are performed, reviewed and evaluated manually, consuming valuable staff time and slowing down the process.

At the same time, insurers find that inspection reports come to them in a variety of formats, from many different vendors; in most cases, inspection records are not stored in a central repository that is easily accessible to underwriting. Consequently, information from inspection reports is difficult to track and analyze.

In addition, different regional requirements and multiple vendor relationships result in a multitude of disparate methods. You can easily see that the need for a solution is greater now than ever.

MODEL OF EFFICIENCY

To stay competitive and successful in today’s business environment, the inspection process must be streamlined. At the same time, the process must contribute to accurately assessing risk, maintaining customer satisfaction and increasing customer retention.

When you have an inspection process that provides consistency, implements your company’s business rules, and has the ability to collect and analyze data, the end result is complete standardization and organization of your entire field survey program.

You’ll experience improved underwriting results through streamlined processes and decision-making tools.

TECHNOLOGY

The way to create this efficient inspection environment is through the use of the right technology and processes. But how do you find the “right” technology?

Some solutions enable insurance companies to order inspections over the Web, but the lack of integration with standard client, database and other internal applications means these solutions are not of great benefit.

With the increasing functionality and popularity of the Adobe PDF format, inspection reports can be e-mailed. But this tool is of limited value as well. It results in a static document that cannot easily be updated, manipulated or integrated in to the client workflow processes. Consequently, results cannot be mapped back into the policy processing system of the carriers.

A truly cost-effective solution must streamline the entire inspection process. If you are examining an internal inspection system, or trying to decide on a new technology to incorporate into an already-existing process, ask the following three questions.

Question 1:

Does the technology collect consistent data and archive it in a central location for real-time access?

Quality data is one of the most important factors in any successful system, because it is the foundation of effective decision-making. In the inspection process – which features inspection surveys that collect incredible amounts of data – accurate, complete and timely data is very important.

One of the best ways to collect quality data is to have a system that enforces consistency through the entire process. An inspection process should have technology that allows users across branches, brokers, and staff inspectors to enter data the same way into the system.

Inspection vendors should be using the same data entry method as that used for the company’s inspection process. When data is collected consistently throughout the entire organization, the quality of the data improves significantly.

The next step is to house the data in a central repository. This means that anytime, anywhere, a user from the company can electronically pull all the data associated with a particular inspection, and make a well-informed decision on the policy in a matter of minutes.

Question 2:

Does the technology integrate completely with your underwriting workflow process?

When looking at the typical insurance carrier’s inspection process, it’s common to see three or four – and sometimes even more – software programs being used. If a carrier has inspection technology integrated within its underwriting workflow, however, the entire inspection process, from inspection order to report, is seamless. Business rules are enforced throughout the entire process.

An integrated process allows the company to pull reports on business workflow, including information about vendor and underwriting processing times and inspection completion dates. With an integrated process, management has the ability to measure both vendor and underwriting work, permitting comparisons and identification of out-of-tolerance performers.

Say, for example, an inspection discovers that an insured has an old, worn-out oil tank in his or her basement. Ideally, a carrier’s inspection system would automatically be able to identify the problem, pinpoint the insured, and electronically route the result to an underwriter for immediate review? The underwriter can take immediate action and protect the insurance company from a risk that can now be mitigated. Such action might also save the loss of property or even life on behalf of the homeowner.

Question 3:

Does the technology enable comprehensive management, analysis and reporting?

The inspection process is much more effective when you can analyze, make decisions and manage your business in real time. If inspection data is housed in a central location, a carrier has the ability to pull out timely information and organize it in many different ways.

Reports can give you a valuable look into your business. Real-time reporting allows underwriters and business managers to identify root causes of problems, take corrective action immediately and find an appropriate business solution to a problem that may otherwise have taken days – or even weeks and months – to identify and cor
rect.

CUSTOMER INSIGHT

The key to good results from your inspection process is having the confidence that every piece of technology and process in place provides consistency, implements your company’s business rules, and has the ability to collect and analyze data. These traits are critical to the success of an inspection process and the resulting underwriting process.

As the homeowner’s industry undergoes change towards innovative and intelligent technology, we may see pricing systems become much more data-intensive. Carriers may even begin to use inspection data to better understand risks.

The end result is sharpened efficiencies through recognizing patterns of behavior and gaining better insight into what the agent/broker and customer wants. This will allow companies to more wisely spend underwriting time and money.