Feature Story:

ISO’s High-Risk Notification Service Alerts Insurers to Hazards

ISO offers its High-Risk Notification Service countrywide — alerting insurers of imminent hazards that present higher potential for loss. Risk control managers at major insurance companies believe the program has already improved their bottom line.

How the service works

Exposed electrical circuits

Over the last two years, ISO has prepared thousands of high-risk notifications for its insurer customers. The service, at no extra charge, provides underwriters with valuable risk information — in time to use it effectively. Accompanying photographs allow underwriters to verify our observations and conclusions. Insurers can take prompt action, including mitigating exposures, amending insurance coverage, or declining coverage on risks deemed too hazardous.

When a field representative discovers a hazard or condition that could result in a higher-than-expected potential for loss, he or she will immediately contact the customer by phone to report the situation. The rep follows up by e-mail with details and photographs, as required, of the hazardous condition. Armed with the information gathered from that on-site evaluation, the underwriter can take prompt action.

High-Risk Notification Service in action

Auto body shop/paint shop — The shop was painting without an enclosed paint booth, flammables were stored out in the open, and building management had shut down the fire sprinkler system.

Building risk — A two-story masonry structure had rusted walkways that affected the building’s structural stability and presented a severe slip-and-fall hazard.

Mercantile risk — The risk had exposed electrical circuits, and a stack of cardboard boxes was located approximately three inches from the wiring.

Building risk — The field rep observed recent damage to a portion of a building, with the rest of the building scheduled for razing. He observed poor maintenance of the building and grounds and a shut-off sprinkler system with sprinkler heads that appeared to be more than 50 years old.

Furniture store — The local fire marshal posted a notice warning of electrical code violations, with a letter also posted from the code-enforcement officer warning of violations. The store had shut off its sprinkler system and disconnected the tamper switch.

Case study — retail store

A space heater with an extension cord near combustible boxes

Field rep David Ward, based in the Dallas–Fort Worth area, conducted an on-site survey of a retail store for a large underwriting customer. During the on-site interview and survey of the property, Ward observed a number of hazards and undesirable conditions that increased the potential for loss to occur:

• ordinary electrical wiring not protected by conduit (noncompliance with the National Electrical Code)
• use of space heaters with lightweight extension cords located near combustible materials
• no fire extinguisher on the premises
• brush and weed exposure at the back of the building
• vent flue not connected to the furnace
• loose sheet metal roof covering on the awning and loose faux log siding on the exterior walls
• improper type of flexible conduit used for the circuit to a lighted sign

Ward notified the customer immediately. The underwriting services analyst had this to say: “David Ward does a great job for us. He communicates where there are problems and is excellent to deal with. His work is first-rate. It’s work like this that sets ISO apart from everyone else and makes our job easier and more effective.”

Case study — restaurant

Grease dripping down the roof below the kitchen exhaust

An insurer customer asked ISO to conduct an underwriting survey for a restaurant. Field rep John Lawless went on-site and found many hazardous conditions:

• significant grease buildup on the roof below the kitchen exhaust
• unprotected outlets behind a fryer and between deep fryers
• an unprotected 220 volt outlet missing a cover plate
• open space in the kitchen exhaust hood that allowed grease-laden vapors to be exhausted without being filtered
• an old extension cord spliced into a refrigeration compressor for power
• a light switch missing a cover plate in a storage area off the kitchen
• open space in a breaker panel in a storage area off the kitchen
• the hood and duct fire-suppression system and fire extinguishers last serviced in April 2006

Lawless immediately notified the insurer of the potential high risk, even before he sent out the survey report. The underwriter is now considering removing the policy from its book of business and has classified the restaurant as a poor risk.

“High-risk notification is an extremely important process that alerts customers to problems well before the normal time frame and lets them take quick action — whether remedial activities or policy cancellation,” says Bill Foster, ISO’s assistant vice president of Risk Decision Services. “ISO field staff actively participate in the High-Risk Notification Service. Our customers recognize the value-added benefits the service provides.”

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