Insparisk

By Stephen Kleva, CEO Insparisk
November 22, 2008

I would like to share the vision we have for the boiler inspection and risk management industry at large. City Spec, Inc., and our parent company, Insparisk, are headquartered in New York City. City Spec is a National Board NB369 certified agency licensed to perform boiler inspections in five jurisdictions including NYC.

In 1991, in response to growing concerns over safety and more than a decade of inspection backlogs, the New York City Council authorized the use of licensed boiler inspectors from the private sector throughout its five boroughs.

Recognizing that the new law would flood contractors with requests for annually required inspections, displacing installation and repair work, CitySpec’s founders immediately established a company dedicated solely to perform and file routine inspections on oil and gas fired low-pressure boilers within the City of New York.

Today, New York City has 850,000 buildings comprised of 400 million square feet of office space, 1.6 million apartments, 2,000 institutional structures and tens of thousands of commercial facilities. Most of this space is heated with low-pressure boilers.

CitySpec performed this service for a number of years both directly and under contract from insurance carriers in a relatively traditional manner, distinguishing itself on customer responsiveness, boiler safety education and service-after-sale.

By 2003, City Spec was conducting nearly 25,000 inspections, leading all others in market share and achieving dramatic improvements in productivity and error avoidance in filing and registrations through the deployment of a proprietary technology.

To date, CitySpec has performed nearly 300,000 such inspections on behalf of building owners, property managers, governmental agencies and insurance carriers. Moreover, it has achieved a unique position in a country increasingly concerned with safety and an industry characterized by manual reporting and filing.

Re-branded as Insparisk in 2006, City Spec is now poised to partner with other governmental entities and insurance carriers in compatible jurisdictions, to license its technology wherever inspection productivity is mission-critical, and to extend its protocols to other building safety and comfort systems undergoing regular inspection such as elevators, facades and fire suppression systems.

From a risk management standpoint, Insparisk intends to facilitate the natural consolidation of this fragmented industry through its SafeSavvy inspection portal offering security, functionality and visibility across the broad variety of stakeholders for this industry.

One of the macro-trends behind the emergence of our company and the half-dozen others like it is the contractual delegation of a number of governmental responsibilities. This trend has been growing for a number of years in areas like corrections, defense, maintenance, health services and most visibly defense operations.

Contractual delegation of governmental represents a gesture in “outsourcing,” comparable in many ways to the business practice that has become so commonplace for private sector companies. Outsourcing in any context introduces flexibility into what are otherwise fixed costs environments, bypasses work rule strictures and carries the prospect of substantial gains in efficiency and productivity.

With respect to boilers in particular, this trend is fueled by the fact that the generation of qualified inspectors is aging toward retirement with little prospect of their replacement in numbers adequate to the task. These characteristics in large measure explain the persistent overdues that plague virtually all jurisdictions.

To date, at least six other jurisdictions including the Federal government have adopted enabling regulations similar to New York City’s with adoption under review in several others.

Yet, the majority of municipalities and states and their representative Boiler Boards have not yet embraced the authorization of private third-party boiler inspections.

I would like to present three arguments in favor of the privatization of boiler inspections:

1. An inspector is an inspector…a license a license…regardless of the payroll behind the person. The professional liability and vulnerability are the same for the private inspector as for the agent of the insurance carrier or the civil servant. To assume otherwise is to argue, for example, that the pharmacist dispenses medication or the physician dispenses advice differently for the Medicare patient than for the Blue Cross case or the uninsured.

2. Both insurance companies and jurisdictions already “outsource” all or part of their boiler inspection requirements to private companies like ours. Insurance sub-contracts account for nearly half the thru-put of CitySpec and the municipality itself (NYC) husbands its licensed talent for new construction, major replacements and oversight.

In our experience, privatization represents good public policy. It has minimized risks and introduced major gains in both safety and solvency for jurisdictions in which it has been adopted. We hope the trend continues and look forward to contributing our experience and insights to the profession.