Every building has a report card, even if it has never seen it: its claims history. Before making an offer, insurers look at what claims the building has reported in recent years – and this story is built into the premium, and sometimes into the terms of cover as well. The good news: this report card can be improved.
- Claims history is the number, nature and size of the building's previous claims – one of the basic factors behind any quote.
- It is not punishment for the past but a forecast of risk: a recurring type of claim tells the insurer something, and gives the building something to do.
- Honest disclosure is both required and worthwhile – a claims history kept quiet can hit back at settlement time.
What does the insurer see?
When quotes are requested, insurers typically ask for the claims data of the past few years: how many claims there were, of what type, and with what settlement. They read a pattern out of the numbers: a one-off major storm claim means something quite different from a run of water damage claims year after year. The first is bad luck, the second is a systemic fault – ageing risers, maintenance put off. Besides the premium, the pattern can also shape the terms: where a type of claim keeps recurring, the insurer may ask for a higher deductible, a technical condition or an exclusion.
The rule of honesty
Questions about claims history have to be answered truthfully – this is not only an ethical rule but a practical one: breaching the duty of disclosure can have legal consequences at settlement time. A “conveniently forgotten” claims history is therefore not a saving but a problem on a timer. The good approach is the opposite: we present the claims, and set out alongside them what the building has done since – a replaced riser, a renewed roof, water sensors. The pairing of a claims pattern with the measures taken is the best negotiating position there is.
How can the report card be improved?
In two ways. The first is genuine improvement: removing the cause of the recurring claims – the loss prevention checklist gives you a guide for this. A loss below the deductible is not reimbursed, so putting it on the policy is a judgment call – the policy terms, however, typically require the loss to be reported even so, so the decision has to be made together with the contract's reporting rules, and it is worth logging unreported losses too in the building's own claims record. To help you weigh it up: deductible logic and the article on claims statistics.
Claims history in the renewal routine
At the renewal date the manager should ask two questions: what do the past year's claims statistics say (is there a pattern, is action needed), and does the current premium-and-deductible structure properly reflect the building's actual claims picture? For a building with an improving record, going out for competing quotes again can be particularly effective – the market prices in the improvement. On timing: when it is worth re-tendering.
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