The current inflationary environment is increasing the cost of property claims as well as the used car market where values have increased significantly in recent times.
More broadly, the Motor industry has been substantially impacted by supply chain issues such as the shortage of semiconductors, the rising cost of parts, labour shortages and the restriction of trade through ports and terminals.
It is anticipated that we will only see things start to improve towards the end of 2023. Consequently, Brokers should actively engage with their motor clients to review existing vehicle values, so they have adequate cover and are not underinsured.
For Motor, the Sum Insured and Agreed Value policies are at times lower than current market values and the difference between the two in some cases, has been significant. Insufficient Sum Insured or Agreed Value policies may lead to unexpected Total Losses due to increased Market Values
To assess the level of cover for Property it is useful to understand the typical under insurance calculation as follow:
|Sum insured x Damage
Repl. Value x 80%