27 Mar 2015

A set of risks that property insurance underwriters review when determining whether to offer an insurance policy. COPE, which stands for Construction, Occupancy, Protection and Exposure, allows the insurer to evaluate the risks of insuring a piece of real estate, which will ultimately determine whether a policy is created.

The insurance underwriting process involves the identification, classification, and analysis of risks. COPE is used to identify the factors that could cause an insurance company to experience a loss. Insurers build these data elements into their valuation models when predicting the likelihood of a loss, including losses stemming from catastrophes.

Analysing the location of a building, the materials it was constructed with, the building’s age, and the quality of the systems within the structure helps the insurer determine the likelihood that the building or structure will be damaged. For example, a wood-framed building is more likely to catch fire, and buildings constructed in areas prone to hurricanes need to be constructed out of materials that can withstand strong winds. Older buildings have experienced long periods of structural stress, and may have outdated electrical and plumbing systems.

Insurers examine who occupies a building and how the building is used. For example, a warehouse occupied by a few dozen workers will have different risks than an apartment complex with hundreds of residents. An insurer may consider a multi-family residential building more risky than a commercial building if a fire department is not located nearby, or if city infrastructure makes it more difficult to obtain adequate water pressure to fight a fire.

Insurers also examine the area surrounding a building. If the building is surrounded by water it may be at a higher risk of sustaining flood or wind damage. Buildings located near a petrochemical plants or facilities that handle combustible materials would also be considered risky.

Covid-19 – Johns Hopkins University

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