WOODBRIDGE, N.J.–(BUSINESS WIRE)–A new report from Global Risk Consultants Corp., a TÜV SÜD company, reveals that many companies are at risk of insurance coverage gaps due to inflation. Losses from wildfires, hurricanes, or accidents are resulting in insurance claims that don’t cover rebuilding or replacement costs.
The free market trends report, How Inflation Led to Property Insurance Coverage Gaps, explains that many companies inadvertently underreport valuations of properties and equipment to insurance carriers. Mismatches between reported values and actual values mean companies are left with coverage gaps and won’t collect enough to restart the flow of business after a claim. Construction costs are a major culprit. Everything costs more from paint (+26%) to wallboard (+18%) to roofing contractors (+21%).
“Companies must defend their values because underwriters are now requiring more data on how they determined asset valuations. A lot of companies are not prepared for that, meaning claims won’t pay for rebuilding or replacement costs,” said David Rix, Global Sales Manager at Global Risk Consultants.
The report also includes:
- Year-over-year inflation data on construction and labor costs
- Why rising construction prices lead to inaccurate insurance claims and coverage gaps
- Common mistakes like relying on market value or valuations over 3 years old
- Frequently asked questions about insurance asset valuations
- Best practices for establishing credible insurable values and SOVs in an inflationary economy
Peter Linn, Vice President of Risk Engineering Services at Global Risk Consultants, said: “Property valuation is a key foundation of property underwriting and impacts several aspects of the insurance risk transfer process. This includes projected claims values, replacement costs, adequacy of coverage, and inflation considerations impacting future physical asset and BI values. Properties values that were appraised years ago may no longer be valid which can leave companies under- or over-insured, both having cost and claim recovery ramifications.”
To establish property and equipment valuations that are credible for underwriting, risk managers should partner with a seasoned valuation specialist.
Justin Chen, Global Manager for Property Valuation Services at Global Risk Consultants said:
“If it’s been three years or more since you’ve assessed valuations, it’s time to get going. Start early. For companies with large real estate portfolios, updating the SOV can be a multi-year process.”
About Global Risk Consultants
Global Risk Consultants is a wholly owned subsidiary of TÜV SÜD America Inc, the worldwide leader in unbundled property loss control, providing the risk management community with accurately qualified site-specific risk recommendations and loss expectancies resulting from property related perils. The company has worked with 20% of the Fortune 500, conducted 56,000 onsite engagements, serviced facilities in excess of $4 trillion, and helped clients reduce their risk exposure by $683 billion. Visit www.tuvsud.com/grc.
About TÜV SÜD America
TÜV SÜD America Inc., a subsidiary of TÜV SÜD AG (Munich, Germany), is a leading globally recognized testing and certification organization. TÜV SÜD’s Business Assurance division provides management system certification services to ISO 9001, ISO 14001, AS9100, Safe Quality Food (SQF), and more. TÜV SÜD’s Product Service division offers electrical and mechanical product safety, Electromagnetic Compatibility (EMC) testing, environmental testing, NRTL and SCC certification, CE marking assistance, restricted substance services, international compliance services, and more. TÜV SÜD America also provides a comprehensive suite of services for the medical device sector as a European Union notified body for the medical device, active implantable medical device and in-vitro diagnostic device directives, and a complete service portfolio including ISO 13485 and MDSAP certification, FDA 510(k) and third-party inspections. The company’s Industry Services division offers a full suite of services for pressure equipment manufacturers and materials producers exporting products to the European Community. The Industry Services division also includes TÜV SÜD Risk Consulting, the leading global provider of unbundled property loss control services. Visit www.tuvsud.com/en-us.
TÜV SÜD Global Risk Consultants