As everyone in the insurance industry knows, rebuild costs on domestic and commercial properties are risng sharply. Many skilled trades are in high demand as the housing sector continues to boom, with thousands of new estates being built around the UK. That means a repair or rebuild jobs, especially in a remote area where workers need to stay over, can mean very high quotes as regards particular jobs.
Here is some commercial sector comment from Lockton’s Head of Hospitality Andy Nicholson, notes:
“While the financial prospects for the hospitality industry have improved significantly due to rising demand this summer, businesses are at risk if the values insured are not adjusted appropriately to account for the sharp rise in inflation being felt across the globe.
“Inflation combined with scarcity of labour and building materials, are all factors which have changed the operating landscape for many businesses, and as a result, the amount and value of risk they have inadvertently taken on.
“Property damage claims are being hit particularly hard because of international shortages in timber, steel, cement, metals, and plastics. This, combined with a global shortage of shipping containers, is leading to the ‘perfect storm’ of significant delay and exorbitant international freight costs. An increase in housebuilding and infrastructure projects is also driving the cost of labour higher.
“The factors above are resulting in many reinstatement projects running overtime at a much higher cost than originally anticipated. Ensuring underinsurance doesn’t pose any significant business disruption risks will be key in the remainder of 2022 when inflation is expected to only rise more.
“To do so, firms should conduct more robust reviews of building reinstatement values than in recent years, and consider appointing a third-party valuer to undertake a Reinstatement Cost Assessment. It’s worth also asking your insurance broker to review current policy conditions, ensuring they are fit for purpose and provide appropriate protection to help mitigate the potential for underinsurance.”
Here is some commercial sector comment from Property Solvers Sell Quick Company Co-Founder, Ruban Selvanayagam:
“With continued inflationary pressures – landlords, property buyers and refurbishers have become accustomed to growing labour and material costs across the board. It is arguably affecting the marketplace as a whole as the parameters have changed to accommodate what’s occurring.
As a result, we can expect to see such upward influences affecting key property rebuilding indices such as Building Cost Information Service (BCIS).”
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