Through their technical body RISCAuthority, the UK’s principal property insurers have identified a trend in the intruder alarm sector of concern.
Field engineers, surveyors and underwriters report that it has become quite common for an alarm system owner to receive a standard letter inviting them to replace their existing signalling system with a new system having a different performance. The rationale given for this change may be that the replacement is technically superior and/or more economical to operate. <br> <br>However insurers are finding that in many cases the replacement system proposed would in fact perform at a European Standard Grade inferior to the signalling system that was agreed with the underwriters when the insurance cover came into operation. This can be the case whether the existing, or replacement, system is single or dual path. <br> <br>The danger faced by policy-holders is that if they actively or passively agree to a material change in the alarm equipment or its performance without notifying their insurer, their insurance protection can be jeopardised. <br> <br>The RISCAuthority Security Group (RSG) has brought the issue to the attention of trade and regulatory bodies; and the British Security Industry Association (BSIA) has circulated its membership with the recommendation that before any change is made, full consultation takes place with the customer who should be urged to involve the insurer in the change. <br> <br>Mike Jay, convenor of the RSG, said: “Installers who fail to bring the impact on insurance to the attention of the customer in a fully effective way could be putting their customer’s business at considerable risk. This risk to insurance cover exists whether a customer allows the installer or signalling system provider to install new equipment or alter the grade setting of existing equipment – something that can readily be achieved with many signalling products installed in recent years. The implication in some of the letters to customers that the replacement is superior simply because it is a dual path can be misleading."<br><br>Some background<br><br>RISCAuthority does research and performs representation on behalf of a group of UK insurers into risk mitigation measures from fire and security risks.<br><br>Acting as a portal for communication between its membership and other stakeholders, through its working groups, RISCAuthority seeks to offer advice and receive notification on all relevant subject matter. Underpinned by research, RISCAuthority publishes through the Fire Protection Association (FPA), extensive guides and recommendations for risk mitigation in the areas of fire and security.
Professional Security spoke to an equipment supplier and an insurer for their points of view: Doug McInnes, general manager for Redcare Fire and Security; and Douglas Barnett, head of customer risk management at Axa Insurance.
Doug McInnes stressed the need for consultation and transparency, making in clear to the customer that an installer is replacing the existing more expensive alarm with a less expensive one – typically, from a grade four system to a grade two – and that this might have an implication for insurance cover. Douglas Barnett, similarly hoped that the customer understood and was given best advice – given how many signalling methods there are, many more than five years ago. Mr Barnett spoke of how the insurance company – if it said someone must have alarm coverage to have insurance – would write in its files to that effect. So: if there is a claim, the insurer will go back to its files, to see what was agreed. If the original contract had stipulated (say) grade four, and the installation had changed to grade two; and the insurer was not told … while an insurer will not deal in hypothetical black and whites, and not go as far to say a change in your alarm will invalidate an insurance claim, it’s something the insurer would consider. In some circumstances it might not affect a claim; sometimes it might. Mr Barnett said: “Our concern is that too often this has been sold by intruder alarm companies as a cost saving, and there is nothing to say, ‘you should check with your insurance company’.” And while an insurance claim for a burglary might be £20k, if your fire alarms are hooked on your intruder signalling system, after arson you may be claiming for £2m.
If alarm users are in fact changing their alarm signalling, are they checking with their insurers? There’s little sign of it. Something else easily overlooked is professional indemnity – does an installer have coverage? If the installer has given advice on the change in alarm technology, and an end user has his insurance claim invalidated, that end user might make a claim against the installer. In a word, insurers, Redcare and industry bodies are urging alarm users to seek clarification.
