Private research firm Sum Insured – which specialises in the production of building contents replacement cost information and expert calculation systems, and whose work is used extensively by insurers to update their policyholders’ sums insured – will be releasing its latest Residential Contents Index (RCI) in Australia.
The RCI is regarded as an important indicator of a cost trend reflecting the movement in the sum insured replacement cost of a typical three-bedroom Australian home’s contents. According to the June 2020 edition seen by Insurance Business, the mean RCI index taken across “average” and “quality” standards has seen a 1.2% increase in home contents replacement costs in the past 12 months.
Average and quality are two of the three home contents standards used in tracking costs. The first standard represents no-name brands, basic equipment, and self-assembled furniture; the latter, a combination of joinery standard furniture, superior equipment, and well-known brands.
A third standard, “prestige,” spans designer brands, top-of-the-line equipment, and handcrafted furniture. It is not used in establishing the mean index value.
“The key drivers of cost for the previous 12 months covering the period between June 2019 and June 2020, saw increases in the prices of major electrical appliances, bedding and linen, clothing, computers and mobile phones, furniture, garden equipment and supplies, kitchenware, luggage, and children’s toys,” noted Sum Insured in its report.
“These increases were partially offset by decreases in the prices of small electrical appliances, decorator items, tools and equipment, and to a lesser extent games and hobbies. Decreases were also seen in audio-visual equipment as households increasingly favour more economical and flexible Bluetooth and Wi-Fi speaker systems over traditional component stereo.”
With RCI being a statistical measure of the movement in home contents replacement costs, Sum Insured said changes in contents prices are researched daily from a wide cross-section of retailers and suppliers. In addition, detailed surveys are conducted to track the typical quantities of items contained within a home.
