Are rising construction costs putting your clients at risk of underinsurance?
Authored by NIG
What’s the challenge?
The risk of clients being underinsured has increased as a result of growing costs in the construction industry.
It’s anticipated that labour and material costs will continue to rise into 2022 so ensuring sums insured are at the right level is more important than ever.
Four things to know about rising construction costs
Covid-19 related lockdowns, Brexit and an unanticipated surge in demand for renovation works have all played a role in creating supply chain challenges and labour shortages. The main drivers of cost are:
- Escalating shipping prices and delays at British ports are causing shortages of crucial parts and materials.
- The Builders Merchants Federation (BMF) reports that timber prices had surged by 20% by the end of January, while some roofing parts are likely to be unavailable until August.
- Shortages of insulation, plaster, concrete products and even power tools have been experienced in recent months.
- Figures from the Construction Products Association show that the UK lost more than a quarter of its EU-born construction workforce between January 2020 and January 2021.
What steps can you take to help your clients?
A Benchmark: building insurance e-valuation provided by Barrett Corp & Harrington (BCH) can help ensure your clients’ properties are insured for the correct amount. Some of the key benefits of a building e-valuation are:
- Quicker and more cost effective than carrying out a site-based survey.
- Can be used to value single or multiple properties on one site.
- Ensures building insurance declared values are based on rebuilding costs, not the property’s market value.
For more information about a Benchmark: building insurance e-valuation, get in touch with your NIG contact or take a look at our guide.
“Of the Benchmark cases we have carried out for NIG to date, 83% were underinsured with sums insured needing to increase by an average of 63%. Underinsurance is a real problem and hopefully our Benchmark e-valuation service is a great solution,” - Lorna Harrington, Director at BCH.
About NIG
We’ve been experts in commercial insurance for 125 years.
The National Insurance and Guarantee Corporation (NIG) is a broker only insurer; we believe in getting to know both the brokers we work with and their clients’ businesses, building trusted partnerships that last for the long-term. Our highly experienced underwriting team are focused on working with brokers to identify and understand the risks faced by UK enterprises. Together, with our risk control experts and risk management tools we develop solutions to help UK enterprises reduce and mitigate key exposures. We offer a wide range of products with flexibility to create tailored insurance cover and when clients need us, claims are dealt with quickly and fairly through a proactive claims approach.
Our trading model has been designed to reflect the differing requirements of how brokers like to trade, with regional offices, National Trading Centre, National Schemes Centre, eTrade Centre of Excellence and dedicated experts for specialist sectors.
We’re investing in new technology to make us even easier to trade with. We’re launching an online risk management resource supported by our in-house Risk Control Team and introduced online claims submissions to speed up the claims process, minimising disruption to clients’ businesses. We are also the only insurer two years running with a five-star rating for both TheHub and Software Houses, in the Insurance Times 2019 and 2020 eTrade survey.
We are dedicated to making UK enterprises more resilient.
NIG is a wholly owned subsidiary of Direct Line Insurance Group plc, providing stability and financial strength. Our policies are underwritten by U K Insurance Limited.