A growing number of insurance brokers believe underwriters should pay for, or at least contribute towards, a professional assessment of building sums insured in order to tackle the issue of underinsurance.
In a poll for this year’s BIBA conference, reinstatement valuation experts RebuildCostASSESSMENT.com asked almost 600 brokers to say who they believed should pay for rebuild cost assessments.
Unsurprisingly, just over 70% said policyholders should pay, as ultimately it is their responsibility to set sums insured. However, there was widespread sympathy with clients, as brokers generally recognised that policyholders lacked capability in setting accurate figures and also how it was in the interest of all parties to get sums insured right. As a result, 10% (58) felt underwriters should pay, with even more stating that some kind of combined contribution from insurer, broker and client would perhaps be more appropriate.
“Generally it is for the insured to pay,” said Stephen Marriott-Smalley, Executive at McClarrons Insurance Brokers. “However it is also in the underwriters interest that the sum is correct so there is no dispute over settlement, saves them costs in the event of a claim and they probably get more premium if the sum insured is correct. So there is an argument that part or all of the costs should be borne by underwriters.”
Danny Toull, Director at Robison & Co, added: "Everyone has a vested interest in making sure sums insured are correct and most will generate an additional premium for the underwriter and additional revenue for the broker. So, it could be argued that all parties should contribute."
“The response to our poll has been really interesting,” said RebuildCostASSESSMENT.com Director Trevor Smith. “A number of brokers told us they are happy to pay for rebuild cost assessment themselves in order to gain competitive advantage. Also, a growing number of scheme providers said they had put arrangements in place so that insurers pay for valuations and at the same time waive average.
“It’s good to see the insurance market responding in a fluid way to a customer issue. While it is the policyholders responsibility to set accurate sums insured, it is clear that many brokers are prepared to think differently to support both their clients and their business model.”
Trevor added: “The cost of rebuild cost assessments has fallen considerably as a result of our digital approach, which in turn is stimulating greater demand and flexibility. Ultimately, we hope this will lead to underinsurance being eradicated and an end to bitter claims disputes over this issue.”
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