We’re currently seeing a “perfect storm” for underinsurance as a mix of inflation, fluctuating exchange rates, global political instability, and increases in labour and materials costs combine to push up the sums insured on commercial properties.
“Inflation has increased at lightning speed even within policy periods, so the onus is on brokers to consider mid-term evaluations and assessments on the risk to ensure they reflect the correct value.”
Aaron Woodhams explored this issue with Insurance Business and urged brokers to work with clients to develop an in-depth understanding of their clients’ risks and business continuity plans. He suggested that at the current rapid pace of inflation, annual reviews may leave clients unknowingly underinsured:
“Brokers have a critical role to play in educating their clients on the risk,” he said, “pushing for more regular, accurate valuations from independent experts and ensuring business continuity plans take into account all eventualities, for instance seasonality of stock. Often overlooked is the rising cost of business interruption; indemnity periods may not be enough to cover the extended delays in reinstatement as a result of these materials shortages. In some cases, 36, even 48-month indemnity periods would be more appropriate.”
Read the article in full here.
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