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Why Are Global Commercial Insurance Prices Rising?

The insurance industry has seen increased prices on a global scale, with the largest recorded increase occurring in the second quarter of 2019. The 6% rise is the biggest since Marsh’s Global Insurance Market Index Surveys began in 2012.

Price rises worldwide

Whilst price rises have varied globally, there was a common theme. All of the major geographical regions saw increased pricing for the third consecutive quarter. These price rises included 5% for the United States, 6% in the UK, 4% in Asia and an enormous 18% for the Pacific. The next consideration is whether the types of insurance correlate and what is causing the continuous increases.

Which insurance types have seen the biggest increase?

Marsh’s survey revealed that the insurance price rises were greatest for financial and professional indemnity insurance at almost 10%. In addition, property premiums increased by 8% and casualty cover rose by 1%. Regardless of what level of cover is required, insurance quotes have risen continuously across all industries, regions and insurance types for almost two years. But what is causing them to rise?

What are the causes?

Over the last seven quarters, there has been a constant reduction in the marketplace capacity to fulfill specific types of insurance for businesses, with the biggest reduction in limits relating to Directors and Officers policies. Some insurance providers are offering limits between 40% and 60% less than in previous years for D&O insurance, in addition to excess liability insurance and property insurance.

The reduction in the value of limits offered can be attributed to greater losses experienced through property and D&O insurance. This is partially as a result of natural catastrophes becoming not only more severe but also more regular over recent years. This has led to considerable pressure being placed on property insurance providers.

The Director and Officer space has been impacted heavily by an increase in the volume of securities class action claims. There has also been considerable inflation of settlement costs, which has driven price rises in both financial and professional liability insurance cover.

Finally, the insurance industry as a whole is experiencing a notable depletion of their liability reserves. Whilst losses increase, insurance claim reserves appear to be deficient as well. As a result, insurance companies are introducing insurance rate increases to ensure that stakeholders receive better results. Whilst the higher rates help to ensure that stakeholders do not lose out, they result in increased costs for clients.

How can I as a policyholder avoid these increases?

At Robison, we always try to find the very best solution for our clients, focusing on sourcing the optimum cover whilst saving money on your premiums. Whether you are looking to cut the cost of motor insurance for your fleet of vehicles or require advice on reducing risks for your business, we are here to help.

Our experienced team are on hand to discuss every element of your policies. We will offer clear and concise advice on all of the potential risks, ensuring that they are well informed. This also helps us to mitigate the concerns of underwriters, leading to more policy choice and often lower policy premiums.

Robison is an experienced business insurance broker based in Petersfield, providing advice and services to businesses and individuals within Hampshire and the surrounding areas. Our highly trained staff are on hand to offer support and guidance, benefiting from a wealth of experience working with businesses across a vast range of industries. Whether you are looking for public liability insurance or employer liability cover to protect against employee personal injury claims, our team can offer tailored advice and services no matter your requirements.

Contact us today for advice or a quote for your business insurance policies on 01730 265500 or email hello@robison.co.uk

A recent survey of insurance brokers highlighted a widespread ‘guessing culture’ among insurance policyholders when setting their buildings sum insured. A renowned reinstatement valuation expert, RebuildCostASSESSMENT.com, carried out a poll to identify the source of building sums insured for 580 insurance brokers in the UK, leading them to conclude that more than a third of policyholders use ‘market value’, whilst one in five ‘simply guess’.

The majority of insurance policy holders polled (35%) incorrectly set the buildings sum insured in direct correlation to the market value of the property. Instead of focusing on what the building could sell for, policyholders should instead focus on the total cost to rebuild from the ground up, which would more often than not be considerably more expensive than the value available should the house ever be sold. This simple oversight means that over 80% of those surveyed are underinsured.

More concerning still is the 20% of insurance policy holders who admitted to simply guessing at the value of the property when setting up their policy. Considering that 10% of those surveyed simply opted for the same insurance value as the previous property owner, it is unsurprising that 90% of buildings across the UK are not insured for the correct amount, leaving homeowners extremely vulnerable.

Some 24% of insurance policyholders surveyed claimed to have set their building sum insured at the value suggested by their bank or building society. A further 6% set the value based upon the suggestion of accountants, property agents and other third-party advisers. Whilst these professional services providers may be able to suggest some level of direction, it is always advisable to commission a professional ‘Regulated by RICS’ property assessment. However, currently only 5% of insurance policy holders are utilising this expertise. Often this is due to the cost of the valuation, yet a number of risk management service providers offer a cheaper digital approach. In fact, many insurance providers (including Robison) now offer the assessment service as part of their insurance package.

For high net worth properties, underinsurance is a particularly significant issue, so we would highly recommend contacting your broker to obtain a ‘Regulated by RICS’ property assessment. In this way, you can have the peace of mind that, should the worst happen, your property and assets are properly protected.

Robison is an experienced insurance broker based in Petersfield, providing risk management advice and services to businesses and individuals within Hampshire and the surrounding areas. From health and classic cars, to sculpture and fine art, our team can offer tailored advice and services no matter your requirements.

To arrange a Regulated by RICS property assessment, or to simply speak to a member of the team, please contact Robison on 01730 265 500 or email hello@robison.co.uk

Although each organisation makes it a top priority to ensure their products and services are both safe and effective for their clients, there is always potential for mistakes to occur. Whether it be a damaged product or public injury on company property, it is vital to ensure your organisation is protected from these costly liability circumstances.

Use this Risk Insights to understand the basics of choosing levels of indemnity for public and products liability cover, as well as top risk management tips to prevent liability at your organisation

Download Risk Insights here

Whether you plan to take your family on a continental road trip in the coming months, or work for a transport organisation that frequently enters the EU, the results of Brexit may alter your current travelling agenda.

This article highlights how a no deal Brexit will impact driving laws in the EU.

 

Black Friday is one of the biggest shopping days of the year, with UK consumers expected to spend a massive £4.7 billion on deals and discounts this year. However, consumers need to consider the impact of Black Friday spending sprees on their household contents value, and in particular the dangers of underinsurance.

Simon Gubbins, Managing Director at Robison & Co., said: “The average UK household contents is valued at £35,000, yet 1 in 4 homes do not have contents insurance and of those who have purchased contents policies, over half are underinsured. This is particularly true of high value home insurance policies, where the risks of underinsurance are even greater.

Some of the most popular items purchased on Black Friday include games consoles, TVs, iPads, sound systems, hoovers and high-end kitchen equipment – items which collectively contribute considerably to the value of your home contents, so your home insurance policies need to be amended accordingly. This is also true of high value purchases made throughout the year. If you knowingly or unknowingly fall into the trap of underinsurance, you could run the risk of severe financial penalties in the event of a claim.”

Underinsurance is a growing problem in the UK, as consumers take an increasingly relaxed approach to purchasing policies. Online comparison sites make it possible to purchase almost any kind of insurance policy without taking any form of professional advice, and it has been revealed that 50% of policyholders provide a rough estimated value for their possessions when taking out home contents insurance, with some decreasing the value to reduce the overall premium.

Simon continued: “Underinsurance is a serious problem in the UK, particularly with owners of high net worth properties. Many policyholders assume insurers will pay up to the sum insured. However, if the insurer deems that the property has been insured below the reinstatement value, they can apply an ‘average’ condition, which will consider the percentage by which the property is underinsured and reduce the settlement proportionately”.

For example, if a policyholder insures their home and contents for £800,000 and subsequently makes a claim for £100,000, their insurer may determine the true reinstatement value at £1m, meaning that the original policy only related to 80% of the actual value of the property. As such, they would only settle in respect of 80% of the claim – in this example, £80,000 rather than the full claim value of £100,000.

Simon continued: “While underinsurance is a frightening prospect, it is an easy trap to fall into without the right professional advice. Our advice to consumers is that they should be as diligent with shopping for their home insurance as they are with finding the best Black Friday deals! Don’t risk falling into the underinsurance trap and take some professional advice for the peace of mind that you will be adequately compensated in the event of a claim.”

Robison & Co is an owner-managed insurance brokerage, offering advice on all areas of business and personal insurance, as well as independent financial advice on investments, mortgages and pensions.

If you’d like further information with regard to high net worth homes and how to avoid underinsurance, see our blog: Is Your Home and It’s Contents Underinsured