’It is not something I agree with,’ says chair
There are brokers blaming insurers for their clients being underinsured due to not getting the data they need to analyse the problem.
That was according to Stuart Reid, chair of Partners& and columnist for Insurance Times, who said the reasoning was not something he agreed with and stressed the need for brokers to tell clients they were not fully covered if they felt this was the case.
Reid made his comments during an InsuranceDataLab webinar, where he said that underinsurance remained an issue for the industry.
According to Premium Credit’s index, which was published on 10 May 2024, 27% of small and medium sized enterprises (SMEs) had cut cover in the past year, slightly up on the 25% reported in last year’s research.
The reduced insurance coverage came as around 50% of SMEs said the cost of their business insurance increased in the past 12 months, with 12% reporting dramatic increases.
Reid said that issues, such as the rising costs of materials and labour, was contributing to underinsurance problems.
”Brokers say that around 75% of their clients are likely underinsured,” he said.
”I have spoken to brokers who say they blame the insurers for the problem because they do not provide the data.
”It is not something I agree with. For brokers, if you think your client in underinsured, you need to tell them. It is a ticking timebomb.”
Solutions
This came after Aviva’s Broker Barometer, which was published on 18 April 2024, revealed that underinsurance was second on a list of market challenges brokers were concerned about, only behind insurer service.
Read: More SMEs reducing level of cover as costs soar
Read: Allianz issues warning as SMEs look to save amid inflation concerns
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Inflationary pressures were found to be the driving force behind this.
Fellow Insurance Times columnist Kelly Ogley, who is also the chief executive of Howden consumer and local commercial, said brokers were key to helping clients avoid underinsurance amid cost of living pressures.
”Given the cost of living crisis, customers are looking to strip out covers,” Ogley said.
”Brokers can explain and make sure that customers know the implications of a decision to remove cover from their policy.”
She added: ”You need to explain that they are underinsured and why you believe that to be so. Then you can work with the customer to explore potential solutions, many of which can be cost effective.”
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