An underwriter can create success when they insure businesses with as close to zero risk as possible. If risk hasn’t been properly accounted for, one bad fire can destroy the entire business. Due to an underwriter’s business objectives of reducing risk to a near zero percent, they can err on the too conservative side of the scale in both assessment and recommended solutions. A conservative assessment that overstates risk, even if it is unreasonable, will be favorable to an insurance company since they are trying to protect their bottom line. The primary concern of fire protection engineers is an accurate fire risk assessment. Coming in from the outside, they can make an objective assessment. Using research and data, fire protection engineers can prove or disprove risk assessments to make sure they are accurately stated.

Verifying Recommendations

A client had two facilities where cardboard carton flats were stored in double-row racks. The insurance underwriter previously assessed the flats as a Class III fire hazard, but due to the presence of corrugated paper board box flats on the pallets, he later upgraded the risk to Class IV. To maintain insurance, the client was told to remove the current sprinkler system and replace it with another system capable of handling a Class IV risk.

After Harrington Group assessed the fire risk, we concluded that insurance underwriter’s assessment was inaccurate. The paper board flats were a moderate, not a high risk, fire hazard. Our conclusion was based upon literature that performed tests involving similar materials. We presented the literature to the insurance underwriter to support our conclusion. They overturned their decision saving the client approximately $60,000 in unnecessary fire safety equipment.

Second Opinions

Business owners, underwriters, and fire protection engineers share a common ground in that they want a building to be safe. A tug of war can occur when an underwriter expects a business operator to pay above and beyond the normal amount to maintain coverage. Fire protection engineers can step in on behalf of the client and appease both parties. Accurately defining risk backed up by data is a fire protection engineer’s specialty. With the right expertise and data, affordable solutions can be found that meet the needs of even the strictest underwriters.

By Jeff Harrington, CEO and Founder of Harrington Group, Inc.