Building Relationships with Insurance Companies

by: Ron Harriman, Senior Consultant

Factory Mutual Research and Engineering (FM) and Industrial Risk Insurers (IRI) are two prominent insurance companies of highly protected risk (HPR) properties. Both provide engineering, education and loss prevention and control support to their insurers.

IRI and the FM companies insure properties, but for the most part, do not insure life, safety, or third party liability issues. They publish information/guidelines on areas ranging from buildings and structures, to electrical, hazardous materials, water supply, alarms, fire equipment and extinguishing systems, to name a few. Roofing is a small, but important part of their focus when insuring a property and attempting to prevent and control loss.

When Benchmark writes a roofing specification, we will ask who insures the building. We ask this question because it is our intent to specify a roofing assembly that meets the criteria established by your insurance company. IRI and FM are different companies and have different approaches, but they are similar in that they intend to reduce overall facility risk by preventing and controlling loss due to fire, hail, wind and snow loads.

When preparing a roofing specification, a myriad of insulations, adhesives, fasteners, vapor retarders, membranes, and flashing combinations can be considered. We ask who insures your property so we can attempt to put together roof systems that meet the specific requirements of your carriers. For example, FM conducts much of its own testing and publishes data sheets and an approval guide. IRI on the other hand, does not conduct testing but utilizes independent third party testing firms to establish their guidelines. IRI commonly uses Underwriters Laboratory for testing and establishing standards for fire, as well as the American Society of Civil Engineers for wind and snow loads (ASCE 7).

When Benchmark completes a preliminary specification, we normally submit it to the owner, insurer, and the roof system manufacturer for review and acceptance. The final bid documents are then issued for bidding, incorporating any agreed upon changes.

In essence, we feel it is important that roofing specifications be submitted for review. More importantly, we see it as being beneficial that a relationship or ongoing dialogue develop between the insurer and owner. It would be unfortunate if the only way your investment (premium) would pay off would be a settlement following a loss. One way to maximize your investment is to actively participate with your insurance representative. IRI and FM have engineers available to assist you.

It has been our experience that the concern or reluctance to actively seek advice from an insurance company is that their recommendations will drive project costs up, as their approach is always the most conservative. It is quite true that their interest is to reduce loss potential. We believe it is in that scenario that you could benefit most from having a strong working insurer relationship. There must always be a balance between what is practical and real world, versus what is perfect or text book. At the very least, it is beneficial to consider alternatives and to make cost and engineering analyses. You as the owner ultimately decide. Perhaps the Underwriter will adjust the maximum loss, deductible, premium, or if the risk is too great, they may opt to cancel coverage.

The burden of initiating this relationship is not yours alone; IRI and FM are obligated as well. We suggest you do more than meet them half way. If Benchmark is involved with your roofs, we're going to encourage an open dialogue and help you select the most appropriate solution. We feel it will enhance the value of the investment you are making in both the roof and your insurance company.