Examining Inspection Program Survey Results
By Sabine Voigt, Loss Control Consultant
Recently, we sent a short survey to WRC client companies about their inspection programs. Twenty-nine clients responded and below is a summary of the results.
When asked to check the description that best describes their current inspection program, two-thirds responded that inspections are completed on all new business and most renewals with documented photos and a survey. One-third said inspections are completed for most new business and some renewals as needed. One person responded that they obtain photos on new business and renewals.
There is variation among clients in percentage of inspections completed by manager, director, agent, staff and vendor. The most inspections are completed by vendors and staff. Two managers reported that they handle at least 50% of inspections and two others reported utilizing directors 2% to 10% of the time.
The respondents stated that the cost of large-risk inspections varies from $25 to $500 per inspection with the average across companies at $112 per inspection. The cost of inspection on all other risks varies from $25 to $100 with the average across companies at $53.
The annual cost spent by responding companies ranges from $1,000 to $185,000 annually and the summed total is just over $1 million. Budgeted costs were shared by 16 companies and of those, the budgeted amount was within 10-20% of actual cost, +/-.
In planning for and implementing a program, there are many things to consider. What type of inspection plan works best? This may vary for every mutual and change over time. Some questions to consider may include:
- Have loss ratios been increasing or decreasing?
- Are there any commonalities in the losses that occurred where variables could be further controlled?
- What actions could be taken by a mutual to help policyowners mitigate losses that occur?
- Are changes to the policy being made when appropriate and are these actions tracked as part of your program review?
- To what extent might policyholders invest in proven loss mitigation and prevention technologies if given incentives and if offered at discounted cost?
There are always opportunities to further improve upon an inspection program. The process is ongoing and never-ending. With the hazards, increasing unknowns and fluidity of covid-19, it is more important than ever to review plans and adapt as necessary.
Inspections are critical and they need to continue. For the time being, remote inspections are the safest option. Fortunately, efficiencies may be greater and information that may otherwise be overlooked or not obtainable through an exterior inspection can be gathered virtually. Several client companies are currently testing a vendor’s virtual platform. Feedback on user experience and discussion around virtual inspections will be included in one of the MLPA sessions scheduled for September 2-3.
While interesting that inspection expenditures range from $1,000 to $185,000 among companies, it is also a reflection of the differences in client company size. The survey is intended to offer a broad view of our client companies. It may be helpful to complete detailed cost/benefit analyses to consider ways in which effectiveness and efficiency of inspection programs may be maximized.