Ferma Blog 8: Independent Assessment & Certification – Improving Performance and Reducing Risk
30th September 2011
Ferma Blog 8: Independent Assessment & Certification – Improving Performance and Reducing Risk
Björn Müller, Managing Director of Lloyd’s Register Quality Assurance Germany & Switzerland
Interviewer: Where do you see the opportunity for LRQA to provide third party services to large insurance companies or provide assessments on their behalf? What would be the benefit for both the insurer and the insured?
Björn Müller: Insurers do have a certain number of engineers employed by the insurance companies doing risk engineering for underwriting purposes. These people are mainly located in city locations and as a result they do have to travel around. Sometimes it could be useful for insurance companies to make use of a professional engineer company like LRQA to send local people to the client (if the insurance company does not have local people themselves), and for LRQA to carry out a detailed assessment by a LRQA. From the insurers’ perspective this approach could limit the fixed cost basis for the insurance companies. And the insured can also have an advantage from that, because if the fixed cost basis of an insurance company is lower the insurance company can provide maybe better terms and conditions for the insurance contracts in general.
Another advantage could be if LRQA is already servicing the client for his management systems then an underwriting related assessment can be easily added to the normal, usual management systems audit. This would mean less number of audits, less hassle to the industry or the organisations in terms of less number of audits, but generating more and better information.
Putting the industry and the insurers in place to get a better common understanding of the risk which shall be transferred and thus being able to negotiate better terms and conditions for a risk but also helps the insurance companies in terms of solvency too.
Increasingly, insurance companies have to sharpen their risk profiles way more than they did before in order to allocate the capital of the insurance company to the defined risk profile. If the profile is sharply defined then the capital allocation can be beneficial and that could lead to fewer costs.