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Widespread underinsurance both a challenge and an opportunity for brokers, says Zurich

Widespread underinsurance both a challenge and an opportunity for brokers, says Zurich | Insurance Business UK

Widespread underinsurance both a challenge and an opportunity for brokers, says Zurich
Major insurer Zurich has warned of the continued trend for underinsurance among SMEs, with up to 80% of the UK’s commercial properties thought to be underinsured.

Infrequency of valuations is a major contributor to the high levels of underinsurance in the sector, as asset values and customer circumstances tend to fluctuate.

“There is a trend for underinsurance in SMEs across the board, because SME’s often don’t review the potential changes in their sum insured regularly,” Pauline White, underwriting analyst at Zurich, told Insurance Business.

 “The importance of having an adequate sum insured cannot be understated.  If your sums insured are correct, it will ensure, at the time of loss, that the insurer can fully reinstate you and get you back to the trading position before your loss.  If your sums insured are too low, that may not be possible.”

While underinsurance can have a serious impact on customers, potentially leading to reduced claims settlements and overall financial loss, brokers have reason to be concerned too. In cases of significant underinsurance, brokers could face the possibility of policyholders seeking to claim the shortfall, or even raise the issue of negligent advice.

 “Brokers need to be proactive in making sure that when taking on a new customer or negotiating a renewal, their supporting documentation and their touchpoints reinforce that the sum insured needs to be looked at regularly,” White said. “Businesses can change from year-to-year, they can potentially take on new lines of business which would either add or reduce their exposure, so it’s about making sure at each renewal or new business touchpoint that the reinforcement is there.”

As well as minimizing the risk of errors, omissions and professional negligence claims, by educating customers on the dangers of underinsurance and the importance of regularly reviewing cover levels, brokers can demonstrate value and even grow their business, according to Zurich. In a market of tough competition, it is vital that brokers tackle the trend for underinsurance, and importantly drive better outcomes for customers in the event of a claim.

To understand more about these challenges and the role brokers can play, click here to watch Zurich’s video on five things you should know about underinsurance.

This week, Zurich has launched its SME Property Owners product on Acturis – giving brokers more choice around how they want to do business with them. Both their Shop and Salon, and Trades and Professions products are due to launch on Acturis in the coming weeks. 

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Zurich: SMEs could end up underinsured due to common mistake