The broker’s balancing act under consumer duty

For brokers, 2026 brings a sharper and more personal spotlight on the accuracy of sums insured. Under the FCA’s Consumer Duty and fair-value expectations, brokers must be able to evidence, explain, and defend valuation accuracy within their advice process.

Both over and underinsurance create client detriment – one through shortfall, the other through wasted premium – and neither is defensible when proper valuation data are available.“A broker’s duty doesn’t end with arranging a policy,” said Johnny Thomson, Head of Strategic Planning at RebuildCostASSESSMENT.com. “It includes supporting clients in understanding whether their cover reflects the true cost of rebuilding.”

A shortfall can wipe out a claim

Rising construction costs have widened the gap between policy limits and reinstatement values, leaving some properties under-protected by 20% or more – often without this being recognised until renewal or, worse, at claim stage.

When disaster strikes, average clause deductions can wipe out significant parts of a claim – a reality no broker wants to explain post-loss, particularly where the sum insured has simply been rolled forward through indexation.Less discussed, but increasingly relevant, is overinsurance. Inflated rebuild figures – often carried forward from market valuations, legacy assessments, or one-off refurbishments – can leave brokers equally exposed, particularly where clients question rising premiums without any corresponding increase in risk.

Consumer Duty covers accurate insurance

The FCA now expects intermediaries to demonstrate that pricing represents fair value. For brokers, that means being able to show how a sum insured was arrived at and why it remains appropriate, rather than relying on historic figures or broad indexation alone.

The solution lies in regular, professional Rebuild Cost Assessments (RCAs). For brokers, RCAs provide a defensible reference point – something tangible that supports advice conversations, renewal decisions, and insurer negotiations when sums insured are challenged. They also help shift conversations away from premium-led discussions towards risk accuracy, reinforcing the broker’s advisory role. This strengthens client relationships by introducing tangible, data-led insight in place of indexation or guesswork.

Regular reviews are essential

Experts at RebuildCostASSESSMENT.com advise brokers to make valuation review part of their annual renewal checklist – supported by clear client communication, documented recommendations, and an audit trail that evidences why a particular sum insured was accepted or challenged. In practice, this can be as simple as recording when an RCA was last completed, whether material changes have occurred, and what advice was given if a client chose not to update their valuation.

“When brokers can evidence that a sum insured is accurate,” added Johnny Thomson, “they are demonstrating fairness and confidence – outcomes the regulator expects, and clients increasingly rely upon.”

Ultimately, accurate rebuild cost data protect all sides: clients receive the cover they need, insurers maintain pricing discipline, and brokers are able to demonstrate that their advice balances adequacy, fairness, and value — even in a volatile market. In that context, accurate sums insured sit at the heart of modern broker professionalism, particularly in a volatile market and under increased regulatory scrutiny.