’Underinsurance is a serious problem and every broker I speak to understands that’, says chief executive

Although the issue of underinsurance existed prior to the current inflationary environment, it is now worsening as the UK’s economic downturn continues.

As a result of this, insurer Allianz plans to attack the problem alongside its broker partners.

Speaking to Insurance Times, Allianz Holdings chief executive Colm Holmes said: “We’re going to be working incredibly hard with our broker partners to deal with [underinsurance].

“Particularly in the UK market, it’s something we’re concerned about and are pushing really hard on – we’re going to work very hard to try and deal with underinsurance before it becomes a societal issue.”

Honing in on the importance of tackling underinsurance, Holmes explained that while it was ultimately up to customers to choose their own level of insurance cover, an insufficient policy would not rescue a business in the event of a catastrophic event.

“It’s ultimately up to the customer to choose what cover they want, but it’s also important that they understand that underinsurance is an issue in the event of a claim being needed,” he said.

Broker innovation

Despite the threat of underinsurance to insurance customers, Holmes said he believed the worst consequences could be avoided with proper planning and advice.

He said: “The role of insurance brokers is predominately one of advisory, they help their customers understand the risks in their business and understand what protections they need.

“Insurers know underinsurance is a serious problem and every broker I speak to understands that – all of them agree that there is a need to work with customers.”

Holmes said that there was a line to be walked between understanding the difficulties businesses were facing during the economic downturn and advising them on the need for proper cover.

“UK insurance brokers are the most innovative – and I would say the smartest – insurance folks out there,” he added.

“I don’t have any doubt that they will work hard to try and do what’s right for their customers.”