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Commercial Landlords: Can a Property Risk Assessment Lower Your Insurance Risk?

Commercial Landlords: Can a Property Risk Assessment Lower Your Insurance Risk?
Commercial Landlords: Can a Property Risk Assessment Lower Your Insurance Risk?

Looking for a security risk assessment to lower insurance risks? Get in touch

Professional risk management can actively lower the risk exposure an insurance provider associates with your business, property or premise – but following through on the actions identified by a formal risk assessment is essential.

Professional risk management can actively lower the risk exposure an insurance provider associates with your business, property or premise – but following through on the actions identified by a formal risk assessment is essential.

Insurers levy premiums based on complex computations, incorporating aspects such as the grade of locks you use on your doors, the type of CCTV surveillance or alarm systems in place, and the potential for a fire or theft to occur and result in an insurance claim.

By taking a proactive stance and addressing risks before they become the subject of an insurance claim, you can swiftly improve your evaluated insurance risk, making your company or commercial building easier and cheaper to insure.

 

How Do Insurance Providers Determine Your Insurance Risk?

Insurance risk is the potential for the insured party to submit a valid insurance claim, prompting the insurance provider to pay out, depending on the policy terms and any limitations such as a payable excess.  Risk is quantified by assigning a score to the possible value of the loss or claim, multiplied by the likelihood of the risk occurring.

Therefore, a risk with a low likelihood, such as having all the inventory within a warehouse stolen, but with a high claim value, could attract the same insurance risk scoring as a lower value incident, such as a broken shop front window, but that is considered far more likely to happen.

Businesses, public sector premises and properties with a higher risk score inevitably attract higher insurance premiums because the provider needs to reduce the risk that they will end up needing to make considerable payments.

Likewise, a complex insurance scenario, or where the risks of a claimable event are very high, can make it very difficult to find an insurance provider and an underwriter who will agree to offer a policy with the protection you require.

How Does a Property Risk Assessment Work?

Risk assessments are a standard across most industries and sectors. You will almost certainly require a risk assessment, renewed at least annually if you have:

  • A business property with one or more members of staff.
  • A facility or building with public access permissions.
  • A commercial premise that is rented to tenants.
  • An investment property let to residential tenants.
  • Any other structure that requires insurance coverage.

As we’ve touched on, the risk assessment process means an inspector or your allocated risk assessor reviews every detail of the building to determine where there may be risks. Hazards aren’t solely related to security or trespass. They may include health and safety provisions, legal liability risks, and environmental issues such as flooding, fire and gas leaks.

In much the same way as an insurance underwriter will attempt to quantify the potential cost of a claim and assess the likelihood of that happening, a risk assessment involves an evaluation of the possibility of a risk developing and the potential frequency and severity of the outcomes.

Does a Risk Assessment Help to Remove or Reduce Risks?

security risk assessmentsFollowing the risk assessment process, the important second step is to complete all the prescribed actions and tasks, usually prioritising the most serious or probable risks identified during the evaluation.  The measures will vary depending on the nature of the risk, but could include:

  • Replacing outdated locks, adding surveillance assets, or incorporating 24/7 monitoring to reinforce the efficacy of property alarm systems.
  • Installing security screens or doors for vacant or empty properties to remove illegal entry, trespassing, fly-tipping and squatting risks.
  • Introducing revised entry permission policies, with access control systems or manual guarding to mitigate high potential risks of unauthorised access.
  • Adding tamper-proof gates or perimeter assets to prevent accidental or deliberate trespass, particularly for properties with large boundaries where uneven ground or concealed hazards could create a legal liability.

In most cases, the property owner or manager will complete the actions within an agreed timeframe, in order of urgency, and then revisit the risk assessment to establish whether the controls sufficiently remove risks or reduce their potential severity and likelihood.

Do Insurance Providers Need to See Property Risk Assessments Before Offering Insurance?

Insurance can be a complex topic, with multiple providers, policy types, clauses and conditions imposed by underwriters. However, in most cases, an insurer considering a policy to cover a building will need to see a copy of the most recent risk assessment.

They may also ask for certifications or documentation showing work completed or to verify the quality of locks, security fixtures, alarm systems and surveillance – whether or not these factors have been flagged in the risk assessment or already verified as being appropriate.

A building insurer will require a copy of the premise fire risk assessment as a basic minimum. If a full building risk assessment is unavailable, they may instruct an insurance surveyor to visit the site and conduct their own independent appraisal to decide whether the provider is prepared to offer insurance and at what premium.

Some underwriters will automatically refuse any insurance applicant who does not comply with their eligibility policies, such as having a risk assessment updated within the last 12 months, having a certain level of security for doors, windows and entry points, or having a property that is expected to be empty for above a certain number of consecutive days.

What Are the Benefits of a Property Risk Assessment?

Robust risk assessments completed by a qualified professional can provide a great deal of reassurance and make it far more straightforward to set up a new insurance policy, renew an existing product, or apply for tailored insurance coverage as necessary.

Many providers will also offer insurance coverage with a more competitive premium where there is clear, documented evidence that the property is highly secure, unlikely to be the subject of an insurance claim, and is protected by a credible security company.

Clearway’s risk assessors provide a wealth of expertise. They can visit your site at a mutually convenient time to evaluate security, environmental hazards and the health and safety measures in place.

The outcome is a detailed risk analysis, specifying areas with the highest calculated risk and recommending steps to reduce or eliminate that risk. Contact the Clearway team to learn more, and to request a risk assessment from the trusted security partner of choice for countless businesses throughout the UK.

Scott Bowers

Scott Bowers

Insurance Director

Scott is an experienced, results driven director, used to managing client relationships at senior/board level, both UK and internationally.
He’s a successful, self-motivated commercially-focused individual with a track record of surpassing challenging goals. Scott has worked within the Legal Services, Insurtech, Insurance, Utility, Counter Fraud and in Investigations for the past 25 years.
As a seasoned Sales Director, Scott has over 20 years’ executive-level experience in B2B & B2C SaaS sales solutions and is passionate about technology & innovation and delivering an excellent experience to customers.

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