Rebecca Fuller in Insurance Edge – It’s Time To Regulate Commercial Building Valuations

Rebecca Fuller, Managing Director, Fixed Asset Management and Insurance Solutions, was published in Insurance Edge promoting the need to adopt legislation to regulate insurance valuations.

Underinsurance within the commercial property insurance market is acknowledged and yet largely ignored. According to Rebecca, “The evidence strongly suggests that if it is going to be addressed, something needs to change. That change could be regulation.”

The insurance industry is heavily regulated, but Rebecca says the Insurance Act fails to enforce the customer’s duty to make a fair presentation of risk to insurers, because the value of the property in risk has not been assessed.

“The failure to get regular valuations and consequent risks of underinsurance benefit neither the insurer nor insured,” Rebecca argues.

Rebecca explains that if over-insured, businesses may be overpaying premiums, and if under-insured, in the event of a claim, the best case leaves them paying up to the sum insured for damages and leaving a deficit against the costs of rebuilding or replacement.

Insurers suffer too because as Rebecca points out, they could be losing revenue if under-charging premiums. More so, in the event of a claim Rebecca says, “In a soft market and for important clients they are likely to feel pressure – from brokers, if not themselves – to simply pay up to the sum insured. For customers who aren’t key or big losses, insurance providers will have to commit to weeks of wrangling, costing time and money, to try and negotiate the payment.”

The reluctance to commit to independent valuations due to cost or disruption to business are increasingly unfounded, says Rebecca, “Duff & Phelps uses proprietary technology to scan and analyze large property portfolios to highlight those in need of a valuation, and those that can safely be left for the future. Our solution benchmarks insured values based upon extensive, global data collected by Duff & Phelps, the world’s largest independent valuation provider.”

The perception of inconvenience persists however due to a lack of records, explains Rebecca, although in 2012 the RICS’ Building Cost Information Service (BCIS) found 80% of commercial property is underinsured.

“With data captured by Duff & Phelps –currently used exclusively by AXA Insurance Business Resilience Managers to assist their clients approximately 5,000 times a year – we can begin to build a real picture of the levels of underinsurance in the UK,” says Rebecca.

With empirical evidence captured, Rebecca hopes that regulation will step in to help promote a fairer, stronger commercial property market for all. 

Read the full article here.

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