Underinsurance The Story in 2015 87% of 374,000 average amount - PowerPoint PPT Presentation

W hat’s on a valuers mind? Update on underinsurance and walk through case studies Dave Clare BSc (Hons), MCIOB, C.Build.E, Cert CII Associate Director – Head of Surveying Services

Underinsurance – The Story in 2015 87% of £374,000 average amount buildings valued in 2015 were underinsured 39% average extent of underinsurance £8m? 9 years Premium lost of surveys and no improvement

Underinsurance – Any better? 0.5bn £1.1m average amount of buildings valued in 9 months 26% average extent of underinsurance Higher Better? Premium lost Lower percentage but higher penalty risk

What's changed – Insurance Act  Insurer uncertainty and inconsistency – Apply penalty vs TCF  Reduction in commercial decisions  Property Investors – no safety in numbers  Brokers less likely to present risks without adequate information  38% increase in quotes  No: of surveys – 350+ Buildings

What's changed – Political Sphere Catalysts  Coming out of recession  Brexit Confidence  Speculative growth - weak sterling, low interest rates Inflation  Increasing Demand/ Reducing Supply  Import Costs (i.e. Steel)  General Election  Migration of construction trades – Freedom of Movement  Indexing less stable

Six Components of the Survey  Arrange a mutually convenient time and date (Don’t rush)  Meet with the person most knowledgeable about the building  Fully understand the risk  Measure and sketch all external areas, including external works  Gather constructional elements  Separate areas into use and calculate

Case Study 1 – Historic Pub

Case Study 1 – Historic Pub

Case Study 1 – Historic Pub

Case Study 1 – Historic Pub

Case Study 1 – Historic Pub

Case Study 1 – Historic Pub

Guess the value?  Sum Insured £1,173.000  Value At Risk £5,640,902 80% Underinsured

Case Study 2 – Mixed Use Leisure Centre

Case Study 2 – Mixed Use Leisure Centre

Case Study 2 – Mixed Use Leisure Centre  Swimming pool, water slides, changing facilities  Gymnasium  Spin Classrooms  Restaurant (Franchise)  Costa Coffee (Franchise)  Ski Shop/ Slope (Plant & Machinery)  Hair Salon (Sub-Let)  Ice Rink  Theatre  Convention Centre  Office Space  Shared Car Park (With Holiday Inn)

Case Study 2 – Mixed Use Leisure Centre

Guess the value?  Sum Insured £17,000,000  Value At Risk £26,876,044 37% Underinsured

Case Study 3 – Expanding Business

Guess the value?  Sum Insured £931,500  Value At Risk £1,641,229 44% Underinsured

Case Study 4 – Restricted Site/ Multiple Materials

Case Study 4 – Restricted Site/ Multiple Materials

Guess the value?  Sum Insured £1,167,340  Value At Risk £3,329,315 65% Underinsured

Ten Steps of Calculation  List areas by usage  Allocate appropriate usage rate (BCIS Quarterly Review/ Knowledge)  Use range for quality of finish  Apply uplifts for material/ labour factors  Apply uplifts for specific items (i.e. Play Area equipment)  Apply rate for regional factors  Calculate external works  Apply rate for demolitions  Apply rate for Professional Fees (incorporating design to build)  Issue clear concise report, noting exclusions

Top 10 Things to Remember 1. Market value Vs Reinstatement value 2. Site Restriction 3. Internal Features 4. Material/Labour Supply 5. Special Features/ Interests 6. Site Contamination 7. Extent of the Risk 8. Modern Technologies 9. Statutory Regulations 10. The Insurance Act – Don't Guess

Where To Go For Help...  Google Warning!  BCIS  Insurer  QuestGates

BIBA Valuation Facility Provides Building Valuations Machinery/Plant and Contents Valuations Business Interruption surveys

Any T: 0121 794 3150 M: 07739 879 245 E: alistair.steward@questgates.co.uk uestions? W: www.questgates.co.uk T: 01204 869 844 M: 07734 708 430 E: dave.clare@questgates.co.uk W: www.questgates.co.uk QuestGates. Passion. Partnership. Progress. Passion. Partnership. Progress. QuestGates.