Ensuring Insurance Discounts Are Deserved
Ron Thornton, president and CEO of the Inland Marine Underwriters Assn. (IMUA), New York, attributes this to information overload. â€œIf an underwriter receives an application either on paper or electronically and he sees the box is checked that they have an alarm system, he may go onto the next issue,â€ Thornton admitted. â€œThe likelihood of an underwriter finding out what type of system it is isnâ€™t there.â€
Another situation that develops is discontinued monitoring. â€œSomeone may have installed a new system and later they drop the monitoring, and this information is never relayed back to these insurance companies, and the customer continues to get the discount for the next 10 to 20 years,â€ maintained Steve Doyle, executive vice president of the Central Station Alarm Association (CSAA), Vienna, Va.
In commercial applications, insurance companies should know who the installing company is, whether it is UL-certificated, who is monitoring the system, that the certificate was issued properly and that this is verified by Underwriters Laboratories Inc. (UL), Northbrook, Ill., or Factory Mutual (FM), Doyle notes.
To solve these and other problems, the security and insurance industries have come together to make discounts in insurance for burglar alarm systems more consistent with the capabilities of the actual systems that have been installed.
Involved in a joint summit meeting of 50 representatives last June in New York City were the CSAA, UL and the IMUA, which represented major property and casualty insurance companies.
â€œInsurance underwriting personnel used to be trained in what were acceptable burglar and fire alarm systems and what to ask for,â€ Doyle explained. â€œThey got away from doing that education, and so few of their people knew what to ask for and look for.â€
Thornton said that underwriters newer to the insurance industry are not conversant with the 50-page book, â€œGuide to Understanding Burglar Alarm Systems.â€
â€œAnother outcome of that summit meeting was to go back to those original books and review and republish them and get them into the hands of insurance people so they could understand the importance of burglar alarms,â€ Thornton noted.
In connection with this, CSAA will update the burglar alarm guide and the â€œGuide to Understanding Fire Alarm Systems,â€ and submit them to the IMUA board for endorsement to IMUA members as educational tools.
â€œThe insurance industry is now relying on UL and Factory Mutual to work with CSAA to help promote the higher standards,â€ Doyle maintained. â€œSo now we are starting a process where they understand it is important and they will make sure their people are properly trained.â€
Planned are seminars on security systems at IMUA presentations in New York, Chicago, Minneapolis, San Francisco, Dallas and Atlanta. These seminars would explain the advantages of high-quality alarm systems that are certificated by UL and FM and ones that feature central station monitoring. Seminar length could be up to two hours. CSAA would seek the sponsorship of local alarm dealers for these seminars.
â€œThe insurance industry is very frustrated by the alarm industry because the insurance industry has needs for standards-conforming systems, especially on higher risk systems,â€ asserted Isaac Papier, general manager of the signaling and security business units for UL. â€œThey need to have an understanding of what is there and need a third party to verify what is there. The insurance industry has not been getting that, and they made that clear at the summit.â€
Doyle continued, â€œThe insurance industry really needs coverage around the country of UL central stations.â€ If a customer did not have such a system, they could go to ULâ€™s www.ULAlarmFinder.com Web site, which provides listings of security companies that can install and monitor UL-certificated systems. Links from the UL Web site to security companiesâ€™ home pages have been up since September. A link to www.ULAlarmFinder.com will be established by the IMUA and the CSAA on their Web sites.
Papier of UL presented the ULAlarmFinder Web site at the National Burglar and Fire Alarm Association (NBFAA) meeting in Las Vegas. â€œIt was quite a hit,â€ he pointed out. â€œThe alarm finder was developed for the insurance industry because members of IMUA were very much concerned about UL-listed alarm systems. They were in need of a resource so their agents and brokers when working with customers would be able to direct them to a qualified vendor.â€
Another issue Thornton said was discussed at the summit meeting was the fall-off in the insurance industryâ€™s use of certificated burglar alarm systems except for jewelry stores, furriers and other sensitive businesses.
â€œWe do know from ULâ€™s standpoint that fewer and fewer people are asking for certification, which requires a UL employee to go to a site and make sure they are in compliance with certification procedures and requires a hands-on, personal touch,â€ Thornton asserted. â€œIf this usage continues to decline, how long will UL continue to offer this service to the industry?â€
Despite these questions, enthusiasm remains high for the joint meeting. â€œThis is absolutely a win-win for the industry and general public,â€ Doyle maintained.
Papier of UL agreed. â€œThis is an opportunity to really increase recurring revenue,â€ he insisted. â€œI think that the industry has been competing on price. I donâ€™t think that they have thought about the concept of competing on quality and the basis of what is really there.â€
He gave the example of high-security customers like jewelry stores not being able to obtain certificated systems with specific features, guarantees and fixed prices over the life of a contract because such systems are not in some security companiesâ€™ standard contracts.
â€œYou have to provide more, but the margins will be higher,â€ Papier pointed out. â€œIf you are going to play in that game, you have to be qualified to do it.â€