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

What’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

buildings valued in 2015 were underinsured

£8m?

Premium lost

9 years

• f surveys and no

improvement

39%

average extent of underinsurance

£374,000

average amount

Underinsurance – Any better?

0.5bn

• f buildings

valued in 9 months

Higher

Premium lost

Better?

Lower percentage but higher penalty risk

26%

average extent of underinsurance

£1.1m

average amount

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

• Passion. Partnership. Progress.

QuestGates.

Any uestions?

T: 0121 794 3150 M: 07739 879 245 E: alistair.steward@questgates.co.uk W: www.questgates.co.uk T: 01204 869 844 M: 07734 708 430 E: dave.clare@questgates.co.uk W: www.questgates.co.uk

• Passion. Partnership. Progress. QuestGates.