Underinsurance a major concern for brokers – Aviva

Three in four insurance brokers are worried that some of their clients may be underinsured, according to new figures from Aviva.

The insurer’s Broker Barometer, which was published today (18 April 2024), revealed that underinsurance was second on a list of market challenges brokers were concerned about, only behind insurer service.

Figures showed that 73% were worried that clients could be underinsured, with inflationary pressures found to be the driving force behind this.

The report showed that brokers have mostly succeeded in educating customers on the impact of inflation on cover levels, with just 10% saying their clients do not recognise the effects it can have on sums insured.

However, 40% of brokers said their clients did not increase their sums insured at all, while 26% increased their sums insured, but still not to an adequate level.

The research was conducted by Censuswide, on behalf of Aviva, with 251 general insurance brokers.

Jason Chambers, director of innovation at Aviva, said: “The underinsurance challenge for brokers has evolved. A few years ago, brokers were being urged to educate their customers on the impact of inflation and supply chain issues on their sums insured and indemnity periods.

“The data from our Broker Barometer survey shows that brokers have been, for the most part, successful in this. However, most businesses are still not adjusting their cover to adequate levels, if at all.

“Brokers can help businesses in this situation by understanding where their clients’ biggest risks are and ensuring that, should the worst happen, their clients will be able to continue trading. “

Solution

As a result of this problem, Aviva asked brokers how insurers can support them in identifying underinsurance and gaps in cover.

The main response from brokers was wanting more data and insight when reviewing a customer’s business, followed by faster quotes.

In turn, Aviva has developed a technology-based quotation solution that uses named entity recognition and generative artificial intelligence (AI) to read broker commercial SME presentations and provide personalised insights on the adequacy of existing sums insured and gaps in cover.

“Personalisation makes the level of underinsurance clear and easy to understand for the customer, instead of an industry challenge that may or may not apply to them,” Chambers said.

“To support brokers, Aviva continues to invest in digital solutions, from a trading and self-service perspective.

“Furthermore, Aviva’s regional underwriting teams can support brokers by identifying those vulnerable clients due to underinsurance. The results underscore what can be achieved when insurers invest in people alongside digitising workflow.

“By making Aviva’s commercial insurance tool available for brokers, we hope to equip them with the necessary tools and information to further strengthen their customer relationships.”