The rising star - Insurance Loss Control Engineering services
Loss Control Engineering (LCE), services have been around since the early formative years of insurance in the form of fire protection surveys. The objective has evolved over time to what it is today, i.e. insurance providers sharing their collective risk management experience to the insured with the aim of loss prevention rather than loss restoration. In return, insurance carriers have greater visibility into risk and can ensure mutual transparency.
Loss control consultants (engineers) or risk consultants are professionals practicing the art / science of safety engineering and risk management, working with insurance carriers. They survey insured for risk exposures, identifying exposures to loss and how the insured can proactively manage these exposures. They investigate various factors (such as nature of business, scale, existing loss prevention etc.) and submit a loss control report to either the underwriters or the clients directly, which will influence underwriting decisions.
Traditionally during the soft markets, Loss Control Engineering (LCE) has been considered by insurance firms to be an auxiliary service. Carriers have taken very little interest in building in-house capabilities, robust processes or systems to optimize LCE. Now, with evidence of hardening in insurance markets (especially in P&C segment) and lower yields from investments, there is a clear shift towards stricter underwriting decisions and claims management. In these lines of business the onus is on carriers to help insured incorporate loss control programs, thereby making it a necessity than luxury. What will be of relevance is for insurance providers to utilize the ecosystem of service providers and technology innovations, thereby offering this as an integrated service offering to their clients.
We believe that the emerging industry trends will push Loss Control Engineering into prominence, and carriers will leverage loss control services to create market differentiation and customer perception as loss prevention partners.