This documentation provides a basic explanation of the features and contents of Best's Loss Control Report. It is intended to help the user understand the types of information found in the product, the significance of its various sections – including Best's Hazard Index, Underwriting Comments, Related Reports, the Risk Description, Materials and Equipment, Exposures and Controls, OSHA Codes and Classifications, and Acknowledgements – and the sources used in preparing the reports.
Best's Hazard Index was developed to identify the relative degree of exposure for each line of insurance coverage in a specific type of business, industry, or municipal service. The numbers given in the index indicate the hazard level (Low: 1-3; Medium: 4-6; High: 7-9; and Very High: 10) for each line of insurance. These numbers are based on a careful review of our collected research, the opinions of those who have read and commented on the reports' drafts, our technical consultants' opinions, and a review of similar or related reports. The Hazard Index numbers may be used to get a quick feel for the overall degree of exposure associated with a type of business, industry, or municipal service.
Because the degree of exposure can vary significantly for different lines of insurance in a given report, these index numbers cannot be validly combined. Each number applies only to its specific line of insurance.
The index numbers typically reflect the severity of the exposures in each insurance line. The Underwriting Comments are then used to qualify this number or identify types of exposures to which they apply.
Underwriting Comments sometimes accompany the Hazard Index number to better clarify the reasoning behind assigning it. These comments also may call attention to major areas of potential loss or factors that may modify loss potential. For example, the "8" assigned to Workers' Compensation in Fireworks Manufacturing and Exhibiting carries the comment: "Severity rather than frequency." We felt it was important to alert the risk manager in this particular line because losses could be considerable, however, not due to the frequency that is typically associated with an "8." If we had balanced the line's high severity with its very low frequency, it would yield a lower number which would misrepresent the exposure. For the General Liability: Premises and Operations line of the same report, a "7" was assigned with the Underwriting Comment: "Much lower without displays." This indicates that the Hazard Index number is based on insureds that handle displays. Companies that simply manufacture fireworks but do not display them have a lesser exposure in this line and, consequently, the Hazard Index number would be lower.
In addition to its primary business, a number of subsidiary operations may be involved in the manufacture of a product or the performance of its service. These potential sources of loss should be considered as well. Such ancillary services are listed under Related Reports. Reviewing those additional reports will give the risk manager added insight into the hazards at hand.
The Risk Description provides an overview of the industry to familiarize the risk manager with the nature of the business that is being evaluated. This section begins with a definition of the industry or the parameters used to define the industry in Best's Loss Control Reports.
The Risk Description then walks the risk manager through the operations or methods of production typically used by the type of business, industry, or municipal service in the report. This step-by-step explanation can familiarize the reader with terminology and techniques that are later highlighted in the report and have a direct bearing on the exposures.
This section also discusses general industry characteristics, including the number of workers employed (along with their duties and training), the layout of the premises, and the hours of operation. Other information may be found in this section as well, such as recent trends impacting the industry and lawsuits and/or settlements that have cost related businesses a great deal of money.
These sections are found for each separate, applicable line of insurance in the report. The Exposures paragraph gives a brief summary of the relevant hazards for that specific line, while the On-Site Inspection and Items to Investigate loss-control checklists provide a risk manager with bullet points that they can check off while touring a company's building or interviewing executives about their business practices. The checklists correspond to the insurance lines (e.g., Automobile Liability, Automobile Physical Damage, General Liability, Product Liability and Completed Operations, Professional Liability, Environmental Impairment Liability, Workers' Compensation, Crime, Property, Business Interruption, Inland Marine, Equipment Breakdown, Cyber Insurance) that are found in the corresponding Best's Underwriting Report.
The On-Site Inspection checklist identifies anything that a risk manager should be able to physically see and confirm in terms of a company's operation. Using the Moving and Storage Firms report as an example, the risk manager should be able to assess the number, type, and condition of the company's moving vans, the physical condition of the home office (e.g., stairwells well lit, furniture steady and safe, electrical equipment properly grounded and NRTL-listed), and the type of fire-protection system installed throughout the premises. On the other hand, the Items to Investigate checklist covers matters that cannot physically be quantified but are nonetheless crucial for the risk manager to examine. Again, using Moving and Storage Firms, the risk manager should be able to ascertain how movers remove furniture from customers' properties without damaging their belongings (e.g., placing heaving blankets on hardwood flooring to keep it from being scratched, asking the customer to remove valuable heirlooms that could be in the movers' way).
Because each checklist is created separately with the assumption that it may be the first or only one consulted, a thorough list is offered. As a result, when reading through several lists, the user may sense some redundancy (e.g., an evaluation of the number, type, age, and condition of all vehicles, or loss controls for tripping and falling hazards). That being said, the focus of each checklist is on what is unique to the industry, rather than what is common to all risk management.
In the United States, the Occupational Safety and Health Administration (OSHA) establishes standards to assure that places of employment maintain safe and healthy working conditions for all employees. The pertinent OSHA standards are added at the end of each industry report. Certain OSHA standards will apply to all types of businesses, and are itemized below.
Many times, outside experts in the particular field are consulted. These may be associations related to the industry, and/or business owners/managers. As a thank you for their valuable assistance, their names and contact information are provided in the Acknowledgements section at the end of each report.
Subject to Change.