Property insurance glossary for risk managers

The amounts each site declares for what it owns and for what it would lose while it cannot operate. They are collected per site and per period, and the insurer prices the programme on them.

The value of the physical property at a site: buildings, machinery and equipment, stock and supplies, furniture and fixtures, lease improvements. Total PD is the sum of those fields.

The income and continuing costs a site would lose while it is out of production after damage. It is declared per site next to PD, and it is usually the harder number to get right.

The number of months the BI value is meant to cover: the time to rebuild, re-equip and reach normal output again. Twelve months and twenty-four months are different questions to put to a site.

Property damage plus business interruption for a site, and for the whole portfolio when summed. A site’s TIV includes the stock and machinery other sites keep there, because the insured value follows the address.

Stock or machinery a site owns but keeps at another site on the programme. Recorded once, from the owning site, and counted in the TIV of the site where it stands, so nothing is declared twice or left out.

One reporting period, usually a renewal year. Values and COPE belong to a period, so this year’s figures sit next to last year’s and history is never overwritten.

How much a site’s PD, BI or TIV moved since the previous period. It is the first thing a broker asks about, and the column that shows it before they do.

Sites report in their local currency. The period’s currency date sets the exchange rates used to convert every figure into one base currency, so sites compare like for like.

The yearly job of asking every site for its values, checking the answers and passing them on. On a spreadsheet it is a chase. In 21RISK it is one request, answered in the app.

Construction, Occupancy, Protection and Exposure: the four headings an underwriter uses to describe the property risk at a site. Documented per site and per period, with photos and documents attached where they belong.

What the buildings are made of and how old they are: roof, external and internal walls, year of construction, number of storeys, and how the building is divided into fire sections.

What the site does and stores: production, warehouse, administration, storage types, shared occupancy with other tenants, and special hazards such as lithium-ion batteries or high-rack storage.

What is in place to detect and stop a fire: sprinkler protection, fire detection, smoke vents, water supply and pumps, extinguishers, external hydrants, distance to the fire brigade, and the routines behind them, such as a fire logbook and hot work permits.

What surrounds the site: neighbouring risks, the natural hazards at the address, and anything else outside the fence that can reach the building.

A part of a building separated from the rest by fire-resistant walls, floors and doors, so that a fire stays inside it. The largest fire section is what an underwriter uses to judge how much can burn at once.

Wall and roof panels with an insulating core between two metal skins. A combustible core burns fast and out of sight, so insurers ask what the core is and whether the panels have been inspected.

An infrared inspection of electrical installations that finds hot spots before they become fires. One of the routine inspections an insurer asks whether a site runs.

A visit by the insurer’s, the broker’s or an independent risk engineer, written up as an engineering report with findings and recommendations for the site.

One recommendation from a survey, a broker or an internal review, tracked to completion: an owner, a due date, a cost estimate, a loss estimate before and after, a status and the evidence that it was done.

What an engineer expects a loss at the site to cost with and without the recommendation in place. The difference is what the improvement buys, and it is how a risk manager ranks the list.

Welding, cutting, grinding and roofing with open flame are hot work: anything that makes sparks or heat near combustible material. The permit records the precautions, the fire watch and who signed. Insurers ask whether a permit system exists.

Earthquake, storm, flood and the other perils an address is exposed to because of where it is, rather than what is built there. Insurers price them per location, and often cap or exclude them.

A traffic-light rating of a location’s exposure per peril, from Munich Re: Low, Medium, High or Extreme for earthquake, storm, flood and overall. Scores come from hazard zones weighted by how much damage each peril usually causes. A site needs coordinates before it can be scored.

A classification of the map into bands of hazard per peril. The band a site’s coordinates fall in sets its natcat score, so two plants in the same town can differ if one sits by the river.

Turning a postal address into coordinates. Natcat and climate data are looked up by coordinates, so a site with an incomplete address has to be fixed before it can be scored.

How the programme’s insured values are spread across the natcat classes: what share of TIV sits in High and Extreme flood, storm or earthquake zones. The one-page view for the renewal meeting.

A projection of how a hazard changes under an emissions pathway, at a horizon such as 2030, 2040, 2050 or 2100, from Munich Re. Natcat says what a site faces today. A climate scenario says how that moves.

Cover that pays a fixed amount when a measured trigger is crossed, such as wind speed or earthquake magnitude at the site, instead of after a loss adjuster’s visit. Fast to pay, and only as good as the location data behind it.

A request to the insurer for compensation after a loss at a site, from the first notification to settlement. When claims handling launches in 21RISK, a claim will start from the site, so the values and COPE already recorded there come with it.

The fixed amount you carry yourself on a claim under the policy, before the insurer pays anything.

The total expected cost of the claim, including the part you carry yourself. Gross incurred is the same number, and it is revised as the claim develops.

Gross means including your deductible. Net means the insurer’s part. Net incurred is the estimate minus the deductible, capped at the estimate, so a small claim below its deductible shows a net of zero and never a negative amount.

Paid is what has actually moved, from a dated ledger of payments by the insurer and by you. Outstanding is the estimate minus what has been paid. A claim with no payments yet shows everything as outstanding.

The yearly cycle of placing the property programme again: collect values, update COPE, answer the insurer’s questions, negotiate, bind. Everything on this page feeds it, and the policy fixes the deadline.

The intermediary who places the programme with insurers on your behalf, collects your data and negotiates terms. With 21RISK the broker reads current values in the app or over the REST API instead of waiting for a file.

The person at the insurer who decides whether to take the risk and at what price, from your values, COPE and natcat data. Better data means fewer assumptions in the price.

A market where capacity shrinks, premiums rise and insurers ask more questions before they commit. Data quality decides terms, so the sites with clean values and COPE renew on better ones.

A large programme split between several insurers: a lead that sets the terms and handles claims, and followers that each take a share. Every one of them wants the same data, once.

Our own phrase, so here is what it means: values and COPE per site, current, in one place, exportable and readable by the broker without an email chain. The state the data has to be in before the renewal meeting.

Risk management information system: the enterprise category of tool for insurance and claims data, usually sold with an implementation project. The comparison page says where 21RISK differs.

The one list of locations everything else hangs off: name, address, hierarchy, status, your own columns. Values, COPE, natcat and audits are all recorded against a site on that list.