‘We are looking to arm the brokers with the data that will allow them to have a conversation,’ says head of underwriting transformation

Insurers and brokers have been told they must change the narrative around the rising threat of underinsurance if the industry is to successfully communicate the challenges to its clients.

Speaking during an online seminar hosted earlier this week (21 February 2022) by Momentum Broker Solutions, Aviva’s head of underwriting transformation Jason Chambers said the industry had to use data to ensure that real threat of underinsurance hit home with consumers.

It came as Mark Briggs, managing director at BCH, said the industry faced a perfect storm of underinsurance.

He said the energy crisis, rising costs of materials, lack of skilled construction workers and a wave of regulation had left the industry facing a situation where 75% of the reinstatement cost assessments carried out by the firm in 2022 found the buildings to be underinsured.

“The past three years has seen what has been described by many in the insurance industry as a perfect storm of underinsurance,” he added.

“Underinsurance has always been there, but it is being highlighted at present due to the coming together of a range of issues which have created the current environment.”

Threat to clients

Chambers said that, as an underwriter, Aviva was acutely aware of the threat to their clients and was keen to work with brokers in an effort to ensure policyholders were taking out the right level of cover.

“It has been a problem for years,” he added.

“In some ways it has been hard to see the signals, but the root of the problem is that many insureds do not update their sums insured with any regular frequency.

“Values are quite simply not updated with anywhere near enough frequency. If you are not updating sums insured, you are always going to have a problem.”

He added the insurer was working with brokers to review their portfolios to and were delivering detailed data.

“We are looking to arm the brokers with the data that will allow them to have a conversation about these issues,” Chambers added.

“We need to have the specific individual data to put before the clients. Broader industry or sector wide data does not resonate with many. They need to know specifically the situation they are in. We need to have the conversation.

“It is a blight on our industry, and it is an issue we have to address.”