Emerging Business Insights
Review Property Underwriting Characteristics to Control Premium Costs
FEBRUARY 7, 2023
Most companies provide limited property data to insurance agents — leading underwriters to make assumptions about the construction characteristics of the company’s buildings and how they are protected from losses. Adding further complexity, many insurance agents simply roll over property data each year at renewal, providing underwriters with outdated information that can increase the cost of insurance, and even compromise coverage in the event of a loss.
Conducting regular, thorough reviews of property data ensures accurate pricing and reduces the chances of having an uncovered claim.
The four property characteristics underwriters use to evaluate a risk and determine property rates are construction, occupancy, protections, and exposure — otherwise known as COPE. Inaccuracies in any one of these can result in increased premiums by as much as 25%.
| C — Construction: Materials used to construct a building, including its roof, play a significant role in determining property premiums. |
| O — Occupancy: Types of occupancy hazards such as work performed, materials stored, and how you manage those hazards, impact how underwriters see a risk and affect your premium. |
| P — Protections: A property’s protections refer to the measures used to protect the property from damage. Your insurance company looks at things like cameras, alarm systems, gates, fences and guard stations. It also considers sprinkler systems and fire extinguishers, as well as distance to the nearest fire station and fire hydrants — all of which contribute to the property’s protection class rating. |
| E — Exposure: The exposure to geographic hazards — hurricanes, tornadoes, wildfires, earthquakes and flood zones, as well as high-crime areas and the nature of neighboring businesses — plays a significant role in the likelihood of a loss. These exposures have a major influence on the perceived level of risk — and on your premium costs. |
In the absence of complete underwriting data from property owners and their insurance agents, insurers use third-party data sources and modeling tools to gather and evaluate property exposures, so businesses usually end up paying higher insurance costs. USI Insurance Services understands the complexities of COPE and can provide an advantage in identifying and providing accurate property data that helps with claim resolutions, reduction of premiums, and negotiating the coverage for a business’s specific risks.
Example:
For a real estate owner who had acquired three new locations over the past two years, USI did an in-depth review of the properties and identified two locations had been rated as frame, when in fact they were masonry noncombustible, which carries a much lower rate.
Once the real estate owner made us their broker, we were able to correct the construction type, resulting in a 23% premium savings of $4,635.
How USI Can Help
USI’s different and better approach to COPE information can save our clients up to 25% on their commercial property premiums. We can work with the insured to do the following:
- Collect key data on buildings and analyze it for accuracy
- Develop replacement cost estimates to indicate appropriate valuations
- Use current data to negotiate with underwriters for more favorable pricing and coverage
In addition to the exposures discussed in this article, USI’s analysis of property insurance programs can identify other opportunities to reduce uninsured exposures and create premium savings. To learn more about the risk management services available through USI, email select.business@usi.com.
SUBSCRIBE
Get USI insights delivered to your inbox monthly.
