Addressing Underinsurance: a data-driven approach

2 Minute Read

Underinsurance is a perennial problem for the insurance industry and is becoming more severe as materials, labour and energy costs rocket globally.

Joao barbosa i SZ Jxklblkw unsplash
Joao barbosa i SZ Jxklblkw unsplash

Earlier this year, Marsh reported that 80% of UK properties are underinsured, amounting to around £340 billion in high net worth and commercial properties, a serious issue and one that has extreme financial repercussions on customers.

Yet how many residential policyholders are in the know about the current rebuild value of their property, and are they aware of the consequences to them of getting this value wrong?

Brokers often report that when asking customers for the sum insured of their property, many use the current ‘market value’ of their property as a basis, others simply guess, neither take into account global fluctuations in costs that can lead to rebuild values being significantly more than the policyholder realises, or change significantly over the period of the policy.

This is where data steps in.

We’re taking a data-driven approach to tackling underinsurance by pre-calculating the rebuild cost for properties across the UK, so saving emotional and financial stress for both the insurer and the policy holder

There’s a vast amount of data available to us that can help more accurately assess the rebuild cost of any UK residential or commercial property, and all we need to do that from the policy holder is  their address.

We combine the address with accurate, comprehensive property data, and detailed rebuild costs gathered in partnership with established and highly respected insurance surveying and buildings companies to generate a reliable minimum cost estimate to rebuild a new property of a similar style, size and location; all delivered in under a second through our API.

To ensure we provide a realistic rebuild cost, we include key cost variables such as:

  • Property type, floor area, age
  • Basements
  • Conservation areas
  • National cost variations
  • Location cost variations including rural, urban, suburban
  • Quarterly cost updates
  • Professional fees, risk and contingency, demolition and removal costs

By applying around 700 million items of property data covering nearly 30m properties across the UK, and property cost information gathered over the past 40 years to these factors – we believe we provide a consistent and realistic rebuild cost, helping our insurance and MGA partners out there price more accurately manage their on-cover risks better, and ultimately deliver a smooth and stress-free service to their customers.

Written by Alun Jones, Chief Commercial Officer, Addresscloud.

To test our no questions asked Rebuild service or to learn more please get in touch.

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