Management of Change Process

Why it matters for underwriting

Many major property and liability losses trace back not to a single point-in-time failure but to an unreviewed change: a process modification, a temporary bypass of a safety device, a new piece of equipment installed without updating hazard assessments, or an organisational change that leaves a critical control unowned. A formal management of change process forces these modifications through a structured risk review before implementation, catching interactions that individual departments might miss. Underwriters use the presence and rigour of this process as a strong indicator of how well an insured controls risk introduced by its own evolution, rather than just its static baseline condition.

Capturing the attribute and evidence

Proposal forms ask a straightforward yes/no question on whether a formal MOC procedure exists, followed by questions on whether it covers equipment, process and organisational changes, who approves changes, and how temporary changes are tracked to ensure they are closed out rather than becoming permanent by default. Underwriters substantiate the declared answer with the MOC procedure document itself, a sample change request and approval log, and, for higher-hazard sites, a risk engineering survey that tests whether the process is actually followed in practice.

Effect on coverage, premium and conditions

A documented, evidenced and consistently applied MOC process supports more favourable property and liability premium rates and can be a factor in extending broader natural hazard or fire sublimits. The absence of a formal process, or a process that exists only on paper, commonly results in premium loading, warranties requiring the insured to implement or strengthen MOC controls, or, where a loss investigation reveals an unreviewed change caused the loss, disputes over policy conditions or exclusions.

Mitigation measures

Insurers and risk engineers typically recommend implementing a documented MOC procedure with clear approval authority, mandatory risk review (fire, explosion, liability, business interruption) before any equipment, process or organisational change is implemented, and a tracking mechanism to ensure temporary changes are formally reviewed and closed out within a defined timeframe.