'Now you see it, now you don't': Issues with virtual inspections

Since the mid-1700s, underwriters at Lloyd’s of London have been using Survey Reports (inspections) prior to binding coverage. Today, most insurers use some form of inspection to identify hazards and develop risk improvement methods.

Little has changed conceptually over the past few hundred years. A recent twist, accelerated by the COVID-19 pandemic, is having policyholders provide underwriters with photo images of their properties.

It’s obvious that there are benefits to policyholder-supplied photos:

• Slightly reduced cost over live inspectors;
• Possible improved turnaround time;
• No inspector physical contact, and
• Maybe less intimidating for some policyholders.

While there are some downsides, we see one big one: Policyholders naturally want to provide the best impression of their property and may avoid sending photos of scorched electrical outlets, water-damaged interiors, rotting facias, etc.

Here are two examples of photos submitted by two policyholders of the same properties:

Virtual and on-site inspections both have advantages and disadvantages. However, underwriters must be cautioned that just because you don’t see hazards in photos does not mean they do not exist. It’s all in the viewfinder, and underwriters must all proceed with caution!

Michael Stumpf is the owner of Continental Risk Improvement, providing underwriters with insightful, individual risk information about hazards they face and effective control measures, with a goal to help insurers reduce the frequency and severity of losses. Stumpf has had a remarkable 63-year career in the property & casualty industry. He started at the age of 14 having binders executed by underwriters in New York’s then Insurance District and has progressed through leadership roles in underwriting, claims, loss control and corporate risk management. He can be reached at customer.service@continentalrisk.com or 888-560-4103.

Related: 

• Differentiating the claims experience in a virtual world
• Image analytics: A competitive approach for property insurers
• The new normal for claims