How underinsurance is affecting businesses in the UK
Momentum Broker Solutions hosted a webinar and were joined by industry experts, Mark Briggs from Barrett Corp & Harrington Ltd (BCH), Jason Chambers from Aviva PLC, and Glenn Thorton from Crawfords who discussed the impact of underinsurance on building valuations, the support available from insurers and the unexpected challenges that arise at the time of a claim.
Mark from BCH (a company that specialises in RICS compliant RCAs) highlighted that the insurance market has become exacerbated over the past few years due to unprecedented events across the globe, which in turn has resulted in an alarming 75% of properties being underinsured.
Mark said:
“The cost of construction has risen substantially due to Brexit, COVID-19, and the war in Ukraine, and combined with the inability to ship materials and the decline in the GBP is the acute problem of the 40-year high construction cost inflation.”
Underinsurance isn’t a new problem, but it is becoming an increasing issue. No one could have alluded to the events that have happened in the world, and although we are all holding out for a drop in inflation, forecasts show that it’s far too early to predict.
Glenn Thornton from Crawfords believes that the severity of underinsurance is having a significant impact and he shared some tips on what individuals can do if they are underinsured.
Glenn said:
“Partial reinstatement is becoming more common, so Crawfords will delay fitting properties fully until the client has everything up and running. Some opt for a cash settlement and decide that they should rent as opposed to own. If it’s a domestic property, some may decide to demolish and reinstate.”
Over the last 12 months, Aviva has seen over £500 billion of underinsurance, which equates to more than 60% of their commercial customers underinsured. This is partially down to a significant portion of properties not being seen over the past four years. Aviva has identified this as an issue and is working with their brokers to have these crucial conversations with their clients.
Jason Chambers said:
“It’s all about data, technology, and highlighting the issue directly to the client. Having open and personalised conversations will change the issue affecting the whole of the industry. We also advise our brokers to communicate with their clients at mid-term and not wait until renewal. We want to make it real for the clients.’
All panellists agreed that conversations surrounding underinsurance are difficult to have and can be perceived as quite negative, however communicating the subject early before any losses is key.
To find out more about the discussion you can watch the full webinar here.