Verisk Adds Hazard Scoring to Commercial Property Surveys

The proprietary risk analytic is designed to help insurers identify the need for loss control measures and make better informed risk-acceptance decisions that conform to their underwriting guidelines.

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Verisk Insurance Solutions (Jersey City, N.J.) has added the Relative Hazard Percentile (RHP) to all field surveys the company performs. By comparing a commercial property with millions of peer properties, the proprietary risk analytic helps insurers identify the need for loss control measures and make better informed risk-acceptance decisions that conform to their underwriting guidelines, according to a vendor statement.

Peter de Freitas, AVP, ProMetrix, Verisk Insurance Solutions.

Peter de Freitas, AVP, ProMetrix, Verisk Insurance Solutions.

Verisk reports that over 550 field of the company’s analysts perform over 350,000 on-site commercial property underwriting surveys annually. The survey provided to Verisk’s clients now includes the RHP, which uses an objective engineering formula to evaluate a building’s construction, occupancy, fire protection, and exposures. Those property features and conditions are then scored relative to state and national averages for similar buildings in Verisk’s ProMetrix database of more than 3.7 million commercial properties and 6 million businesses.

“The property condition and associated risks are obviously important, but knowing how that property’s risk characteristics compare with those of its peers provides a powerful insight,” comments Peter de Freitas, assistant VP, ProMetrix, Verisk Insurance Solutions. “Verisk’s Relative Hazard Percentile stratifies properties and gives our customers an objective risk score for individual risk selection and loss control prioritization.”

Verisk’s RHP is based on a 1-to-100 scale, providing insurers with a relative ranking among similar properties. A higher score indicates the building has fewer deficiencies and is quantitatively ranked better than other properties with the same occupancy, size, and level of fire protection.

Example of Verisk's Relative Hazard Percentile score.

Example of Verisk’s Relative Hazard Percentile score.

The property characteristics that factor into the RHP  include the construction class, which relates to the materials used to build the property and the percentage of the structure that consists of each kind of material; the occupancy, which is indicative of the flammable contents and exposure; public and private fire protection capabilities, such as a functioning automatic sprinkler system; and exposures presented by nearby properties and local risk of wildfire, flood, and seismic activity, among others.

Additional Insight

“This additional insight allows underwriters to quickly identify which properties have higher or lower risk,” de Freitas explains. “And that helps them make more informed underwriting, tiering, and coverage selection decisions.”

The RHP is now included on all commercial property field surveys and in both the short and long versions of the Building Underwriting Report, which is available through the ProMetrix platform, according to Verisk.

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at [email protected] or (503) 936-2803.

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