Insurance broker network Ausure is highlighting the persistent issue of underinsurance among Australian businesses, emphasising the need for enhanced awareness and accurate policy valuations.
With an increasing number of claims disputes noted by organisations like the Australian Financial Complaints Authority (AFCA), Ausure is advocating for more robust conversations between brokers and their clients regarding the true replacement costs of insured assets.
Ausure noted that the underinsurance problem often emerges when the declared value of assets on insurance policies falls short of their actual replacement costs, potentially leading to significant financial distress during claims. This issue is particularly prevalent among small and medium enterprises (SMEs), which may not regularly reassess their coverage needs.
Ausure experts stressed the importance of utilising tools such as quantitative surveyors or online valuation platforms to assist clients in accurately setting their sums insured. While these tools provide preliminary estimates that can guide clients, the ultimate responsibility for deciding the coverage amount rests with the clients themselves.
Ausure said the demands on brokers have intensified, particularly around renewal periods.
The industry trend of simply rolling over policies without a thorough reassessment can lead to major coverage gaps, especially as market conditions and insurance offerings vary significantly. Inaccurate sums insured can delay the claims process, resulting in protracted disputes and extending recovery times for businesses.
Ausure also pointed out the shifting landscape of indemnity periods, which are crucial in ensuring businesses can recover to their pre-loss state. It advised brokers to discuss longer indemnity periods, such as 18 or 24 months, with their clients to provide better coverage options suited to their recovery needs.
Ausure emphasised the necessity for the insurance industry to adapt and respond effectively to underinsurance challenges. It advises brokers to:
