PI underwriter guides brokers on underinsurance exposure
A highly-experienced PI underwriter has warned that “a gentle uptick” in underinsurance related claims is highlighting a need for the insurance industry to do more to tackle the issue.
John Cross, Managing Director of Glemham Underwriting, is a specialist Professional Indemnity (PI) Underwriter with around 30 years experience working in both the composite and London markets. He set up Glemham in 2006 to offer PI and commercial insurances to small-mid market businesses through a network brokers.
John told us his advice to brokers was to always have a solid terms of businesses agreement (TOBA) in place, which refers to sums insured. However, he added brokers should go a stage further and offer, or at the very least highlight, a practical solution to the problem.
“We know that most brokers are not qualified to provide building calculations and we know that customers are cost sensitive, but somebody has to take ownership and somebody has got to explain why it needs to be right," said John.
“From a PI perspective, underinsurance is increasingly coming into the underwriters thought process and when brokers are our clients what we want is to get to a situation where they have done everything they can to protect themselves.
“Broker protection always starts with the contract, the terms of business agreement they have with the client. We expect all brokers to have a really clear, fairly worded TOBA with the client, that sets out who is doing what so if a dispute occurs you have something to look at to help determine whether there is any liability."
He added: "When it comes to the sums insured I would expect most brokers to state they are not experts, or legally qualified to provide that information, but I think if you are doing that you have an obligation to have a solution for the client. What we recommend to brokers is they go a stage beyond that and actually give it to a professional to do.”
John went on to highlight how through the development of accurate desktop assessments and online delivery, the cost of valuations had fallen to a level where “there was almost no excuse not making sure the building sums insured were correct.” He called on brokers and insurers to avoid the issue turning into “insurer versus broker” and to work “hand-in-hand to get it right.”
You can view our interview with John Cross on our YouTube channel here.
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