ProMetrix
Probable Maximum Loss
Report
Do you know the extent of your risk?
Use Verisk’s PML Report
to predict loss severity.
Probable Maximum Loss (PML) is an estimate
of the largest loss that a building or a business in the building
is likely to suffer because of a single fire occurrence — considering the existing mitigation features. The PML is the maximum expected loss, expressed as a percentage of the building’s
value, when critical protection systems are functioning as
expected. It’s difficult to estimate PML, and arriving at the
most predictive percentage of loss to value depends on many
variables specific to the property. For example, the combustibility of the building and the susceptibility of its contents
to fire, smoke, and water damage play an important role in
determining the PML.
The Maximum Foreseeable Loss (MFL) is an estimate of
the largest fire loss likely to occur if a key loss reduction
system fails.
The PML and MFL percentages depend on many factors, such
as construction, occupancy, and private and public protection.
For example, in a fire-resistive building with a fire division
wall between each occupant, chances are the entire building
wouldn’t burn if a fire broke out. But in a building without
adequate protection features, a single occurrence might involve
a significant loss, and the probability is high that both the
building and its occupants would experience extensive damage.
The value of PML and MFL in underwriting
Uniform and accurate estimates of PML and MFL help you:
• understand the extent of the risk involved and manage it
better through hazard and loss analyses
• meet company underwriting guidelines
• assess economic loss to the property
• determine the amount of reinsurance needed and satisfy
reinsurance requirements
• decide whether or not you want to insure a risk
Internet delivery of PML Reports through ProMetrix®
When underwriting commercial properties, you can obtain
PML Reports through the ProMetrix® system. The reports
give estimates of both the PML and MFL for each building or
occupancy. You can order PML Reports for commercial properties located throughout the country and get easy-to-read
reports to print or download as XML data sets. You can search
for a match from approximately 3.5 million buildings and 6
million businesses occupying those buildings in the ProMetrix
commercial property database. You get the accurate PML and
MFL percentages needed to underwrite and price commercial
policies. ProMetrix offers ordering flexibility. When you
request a Building Underwriting Report, Rating Survey Detail
Report, or Underwriters Advantage Report, we include a PML
Report at no extra charge. You can also order it alone or in
conjunction with any other report available.
Quality data produces precise values
The ProMetrix database contains the high-quality, fieldverified data needed to calculate accurate estimates of PML
and MFL. When you order a PML Report, you get the most
consistent assessment of the maximum expected loss due
to fire, smoke, and water damage.
We consider these variables when we calculate PML:
Building construction
We consider the construction of walls, roofs, and floors, as well
as special features used in the building. Many categories of
construction — ranging from masonry to fire resistive to
combustible — affect the PML. Special features such as division walls, which restrict the spread of fire, can reduce PML.
Combustibility of contents
We consider the combustibility of the building’s contents
for various occupancies and apply a numerical ranking. For
example, woodworking or occupancies that handle flammable
liquids have high levels of combustibility — contributing to
faster and more extensive fire spread.
Susceptibility of contents
We consider the susceptibility — or likelihood of damage
from fire, smoke, and water — of the contents and apply a
numerical ranking. Occupancies such as florists and pet shops
can experience severe losses even in small, quickly extinguished fires.
Public and private protection
We consider private protection features, such as automatic fire
alarm and sprinkler systems, in addition to public fire suppression capabilities. Those features minimize loss potential
and reduce PML.
We calculate MFL by taking the PML and — through a “what
if” analysis — determine the foreseeable damage if the most
significant loss reduction system fails. Those systems include:
• automatic fire alarms
• watchman services
• automatic fire sprinklers
• limited-supply fire protection systems
• public fire suppression
The Verisk PML Report: An essential element in a loss control review
• Here you’ll find the building’s full address
and the date the Verisk field representative
surveyed the property.
• The report displays the PML and MFL for the
building and each of its occupants.
• Here you’ll find definitions for PML and MFL.
545 Washington Boulevard • Jersey City, NJ 07310-1686 • www.verisk.com/cp
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For more information about Verisk’s Probable Maximum Loss Report
Call Verisk Customer Support at 1-855-859-8775 or send e-mail to [email protected]. Or contact your Verisk representative.
For information on all Verisk products, visit us at www.verisk.com.