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Let's Talk: Engineering Property Risk

Let’s Talk … Jonathan Salter, Property Risk Engineering

What is property risk engineering?

Put simply, risk engineering is the practice of carefully analyzing a risk and looking for ways to avoid or minimize its damaging potential, addressing both frequency and severity of events.  Risk engineering first emerged in the US during the 1830’s with the desire of mill owners to reduce their insurance premiums!  Fire was obviously a big risk to properties. Early pioneers of risk engineering looked at ways to prevent fire and to reduce the damage that a building would sustain from a major fire loss.  It has evolved considerably over the last century. What was once a discipline focused on fire protection is now a broadly –focused, collaborative discipline designed to protect property against damage from a wide variety of risks and natural forces.

How did you get into the field of property risk engineering?

I’m a biochemist by training. I became involved in risk engineering after realizing I didn’t want to spend my life working in the confines of a laboratory. My first job after graduating was working with an insurer where I had the opportunity to experience the various functions an insurance company performs. I was instantly attracted to risk engineering because I got to liaise with clients personally while helping provide underwriters with the data and insight needed to properly underwrite a property risk.  

What role do property risk engineers play in the underwriting process?

It’s often said that risk engineers are the eyes and ears of a property underwriting team. We provide the underwriter with the information to help them evaluate property risks and to determine whether the risk is one the insurer can live with.  Risk engineering is particularly important in insuring the complex property risks that XL Catlin insures around the world.  Through property risk engineering, our clients are able to take strong precautions to protect their properties from loss and avoid a loss. That helps us protect XL Catlin’s profitability so that the company remains financially strong enough to support our clients.  It’s a win-win scenario all around.

What experience do XL Catlin’s property risks engineers bring to the table?

While many property insurers have recently started investing in developing property risk engineering teams, our team’s origins go back some 125 years. They bring considerable experience and value.  On average, our risk engineers have 19 years of individual experience working with a wide range of industries.  This sector expertise and understanding of process and risk is invaluable when you are talking to customers about their complex problems.

What do XL Catlin’s clients gain from property risk engineering?

At XL Catlin, a dedicated risk engineer is appointed for each insured.  Our risk engineers support more than 800 clients – almost half of the Fortune 500 companies – that operate in more than 130 countries. Last year alone, they conducted more than 6,000 on-site visits. 

During these visits, risk engineers assess a property’s potential risk exposure, providing technical assessments on construction types, occupancy hazards, physical protections and management program.  While this information is used in the property insurance underwriting process it is also shared with clients, along with actionable recommendations for improvements.  For instance, we might suggest certain fire sprinklers or different storage practices or enhanced employee training in a particular area. 

As a global insurer, our property risk engineers also have access to significant loss data and metrics including industry benchmarking and loss estimates, as well as fire modeling and probabilistic risk assessment.  This is highly insightful and when shared with clients, this information helps our clients evaluate their potential risks, compare themselves to their peers and make educated, data-based risk management decisions and investments.  It helps them spend their risk management budget where they can get the most improvement and risk reduction for the money they have available.

Could you illustrate how property risk engineering might work with a client?  

Consider one client who had food manufacturing site. In the on-site investigation, we found that the construction materials used in an area where there was a hazardous process were extremely combustible. If a fire were to start, our engineers knew it could quickly spread throughout the area and spread to the entire facility, possibly burning it to the ground. We discussed the hazards with the customer and the underwriter.  In the end, the company decided to bite the bullet and spend the money to use less combustible material. This also made the underwriter more comfortable to underwrite the risk.  Shortly after the construction upgrade, a fire did break out at the facility. However, because of construction materials changes, the fire was immediately contained allowing the factory to be up and running within days. To me, this is a great example of how risk engineers work – helping minimize property damage, business interruption and financial losses.

What does the future of property risk engineering look like?

We are continually innovating.  Our proprietary MyAnalysis (SM) online tool offers insureds comprehensive analysis of company risk data, supports critical risk management decisions and includes metrics such as benchmarking, loss estimate, COPE information and recommendations.

Probabilistic Risk Assessments are one of our newest offerings. While we have a long history of setting loss estimates based on potential severity, this new product accounts for the frequency of losses which is needed to understand the true risk and to assist in allocating resources to manage that risk.

Every day my belief is that all property losses can be prevented.  But as I see it, a risk engineer’s role is much broader than pure property loss prevention. At the end of the day, our goal is to help our clients succeed. If they succeed, we succeed. 

For more information about XL Catlin’s risk engineering, contact your local Property Risk Engineer, visit or call the author direct: Jonathan Salter, +44 20 7458 5847,  

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AXA XL is the P&C and specialty risk division of AXA.