The importance of risk engineering on a construction insurance policy

Integra has been providing technical loss adjusting services to the construction and energy insurance market for more than 23 years. In that time, we have seen at first-hand how the success of projects can be directly influenced by an effective programme of risk engineering activities. Integra Risk Services Managing Director, Paul Latimer talks to Integra Head of Marketing & Communications Doug Horne about why Integra has decided to create a risk services business and in the first instance provide risk engineering management for construction projects, no matter their size or geographical location.

Doug: Paul, tell us a bit about yourself?

Paul: I graduated with a masters degree in Civil Engineering, Design and Management. Then I joined the insurance market, working within the construction team at Willis before moving on to JLT. After 10 years as a broker, I moved into underwriting. I set up the construction and engineering portfolio at Catlin before moving to Travelers to establish their international construction portfolio. I joined the Integra leadership team in September to head up the risk services business and help to grow its long-established loss adjusting practice. Integra’s hard-earned reputation as a trusted partner to insurers and brokers feels like the perfect foundation for a complementary risk engineering offering.

Doug: Why is risk engineering so important?

Paul: There’s no doubt that the importance of risk engineering is well recognised by all those involved in the sector, especially on construction policies. It gives insurers an expert view of the exposures on the project they are insuring. And gives the insured access to the insurer’s and the risk engineer’s previous experience across many similar projects.

Doug: So why isn’t it taken up more frequently then?

Paul: Good question. Basically, to be really effective, a risk engineering programme needs significant time, effort and input from people who are appropriately qualified. This typically falls to a lead underwriter, but inevitably eats into their time and diverts them from their prinicipal role. Even where an insurance company has its own in-house engineers, they are often fully occupied with operational programmes. It takes time to identify, plan and engage with independent risk engineers, so surveys simply aren’t carried out in a number of cases. This has been the situation in insurance for as long as I’ve been in the industry, and quite possibly many years before.

Doug: So is there a solution?

Paul: If you can find a way of removing the day-to-day management of these programmes, opening a flow of information to and from the risk engineers, and managing the payment process, then lead underwriters can make sure that many more surveys are carried out. And do this without being distracted from their principal everyday activities.

Doug: And I guess that is where Integra comes in?

Paul: That’s right. I’ve joined Integra to set up a risk services business with exactly that purpose. Here I can combine my broker and underwriter experience with the expertise and knowledge of Integra’s technical loss adjusters. Integra Risk Services offers outsourced risk engineering management to the construction and engineering markets. We do this through a fully costed formal programme of risk engineering activities developed for the duration of the project. This includes, amongst other things, a full review of project information, loss insights and lessons learnt, a detailed proposal for risk engineering in line with LEG (London Engineering Group) Protocol, monthly collection of progress reports and schedules, collection and payment of fees with full audit trail, and also, very importantly, the mechanism to return unspent fees to the markets.

Doug: What does this mean for brokers and insurers?

Paul: Risk engineering is a really valuable tool for demonstrating to management or treaty reinsurers that insurers are carefully monitoring their live portfolio. It also helps with project programming as risk engineers can flag up any anticipated delays to the overall completion date. This can benefit brokers and insurers with time savings of over 120 man-hours associated with programme development, fee management and administration. Also, insurers can expect cost savings averaging 20%, as only the detailed budgeted fee is utilised, with the balance returned to participating insurers.

Doug: Is this service available now?

Paul: Integra Risk Services launched at the start of 2022 and we now have five live risk engineering management projects. So if anyone wants to find out more about how we can help, I’m more than happy to discuss.