THE BROKER: Are we winning the war against under-insurance?

14th August 2019
This article has been reproduced

Alistair Steward of BIBA’s Valuation facility QuestGates looks at the evidence.  Under-insurance has always been a problem – potentially devastating for a client if only discovered at the time of a claim, causing friction for the loss adjuster endeavouring to agree settlement and risking reputational damage to both insurer and broker.

While inadequate sums insured aren’t set intentionally, for many years we uncovered staggering levels of under-insurance with little sign of improvement. QuestGates has found almost 90% of the properties surveyed were under-insured and by some considerable margin.

Suddenly though, the data improved.  In our latest Valuations Survey, involving properties inspected in 2018 as operators of BIBA’s Valuation Facility, both frequency and extent of under-insurance fell.

Evidence from claims managed by QuestGates in the period shows the number of claims payments reduced due to under-insurance fell by over 30%.

Is it just coincidence? I suspect not.  The benefits of setting accurate risk values are far better understood now and the information promoted via member associations like BIBA has been welcomed.  I hope the other reason is that it is far easier to engage a professional to assist with calculating the correct value and, or course, the Insurance Act has placed greater responsibility on brokers to ensure fair presentation of risk.

There is definite improvement, but complacency would be ill-advised.  We still regularly see cases where no demolition costs or professional fees have been allowed for, just the pure re-build cost.  Online valuation tools, whilst cheap and easy, can lead to important features like basements, car parks or costly eco-friendly features being missed, so it is crucial we all play our part in keeping this subject high on the agenda at client meetings.

As Benjamin Franklin said, “It takes many good deeds to build a reputation and only one bad one to lose it…”

QuestGates manage the BIBA accredited valuations facility to assist brokers with buildings valuations as well as plant, machinery, fine art and antiques, engineering and technology and business interruption.

Contact Alistair Steward on 0121 794 3150 or biba@questgates.co.uk