Using Insurance Credits to Justify Security Investments
Your insurer is your partner in the risk business. The more insurers understand how security products can impact risk mitigation, the more effectively they will be able to price premiums. Your company’s insurance rates are commensurate with your risk exposure,” says Neil Lakomiak, Business Development Director, Building and Life Safety Technologies for UL LLC.
It’s often remarked as a selling point for new products and services that adding technology to your security program can help reduce risk and lower your insurance rates, which brings more value back to the business.
“It boils down to the assets you’re protecting, from a risk standpoint,” he says. For example, if you’re securing a K-12 school, adding access control and other security technology is likely to benefit your risk profile – and subsequently the potential for insurance discounts.
In addition, it’s not just security technology that could impact your risk profile and insurance rates. “Security should be viewed through technology, people and processes,” says Lakomiak. “If any of the three break down, you could have a loss. If your security cameras aren’t maintained or monitored, what use are they?”
According to Lakomiak, security professionals should start a dialog with their insurer, discussing the impact of certain certified products to determine the effectiveness of your current security program’s performance, to help understand your businesses risk profile.
According to David Sexton, Vice President of Loss Prevention Consulting for Jeweler’s Mutual Insurance Company: “Working with your experienced and knowledgeable specialty agent, broker and underwriter, you should review your entire operation, identify your exposures to loss and prioritize what your immediate and long-term measures will be to cost-effectively manage your safety and protection. An experienced agent or broker can be your greatest asset to inform your strategy to reduce loss and help you better manage your insurance costs.”
For jewelry stores, which are specific targets for crime, the best defense is often a trained and aware staff, which can look for signs of casing or other suspicious behavior.
“The tactics thieves employ against jewelers haven’t really changed in decades,” Sexton says, “so we continue to engage our policyholders in their own protection by helping raise their awareness about their key vulnerabilities.” Jewelers Mutual’s filed premium rating structure applies credits for protective measures adopted by policyholders that are material to the mitigation of loss. One example would be a credit for a UL-certified burglar alarm system. The amount of the credit applied in the rating of a jeweler’s block program will depend on any number of variables, many of which will be unique from one account to the next.
UL-certified alarm systems can be a great investment, Sexton adds. “UL-certified burglar alarm systems assure that the installation and operation of the system complies with their standards. They provide practical things for the consumer, including system service and maintenance over the life of the certificate, an annual inspection and test of the system, and assurances that the integrity of the alarm communication channel with the UL-listed monitoring facility remains intact over the life of the certificate,” he says.
Lakomiak adds: “End users can look to standards and independent certification to help them determine what exactly they’ll get from a product, which enables them to make better, informed decisions about price versus performance.”
“Choosing one of these systems means choosing value and service over expense,” says Sexton.
Up-front costs on any burglar system installation (certified or non-certified) vary, and they should be seen as part of a long-term investment. Sexton adds: “Investing in improved security systems can result in both immediate premium savings as well as longer term savings by protecting the account’s experience credit by mitigating the exposure to loss.” This can help justify your purchase to company leadership because security leaders will be reducing their overall risk throughout their long-term strategy.
In other words, realizing the immediate credits for protective safeguards may be great motivation, but the long-term value of successfully reducing your exposure to loss overtime, making you a better risk for insurers by reducing losses, will pay off.