Last week, on Friday 19 May, the Victorian broking community came together at the Crown Melbourne to network and celebrate their achievements, including the announcement of the Vic/Tas winners of the Vero-sponsored 2023 Vic/Tas Young Broker of the Year and the QBE-sponsored 2023 Vic/Tas Broker of the Year 2023 award.
Vic YP Committee’s Breakfast Seminar
The day started with a breakfast seminar which featured an engaging panel discussion facilitated by the members of the Young Professionals Committee.
With the Australian economy and households tackling rising cost of living, the expert panel of speakers explored the impact of underinsurance and inflation in insurance placement and claims. The panel covered how insurance brokers can assist their clients with managing risks through surveys at the property, presenting to underwriters, how the risk is reviewed in underwriting, and managing underinsurance during the claims process.
Key lessons on assisting clients when it comes to the impact of inflation and underinsurance
1. The impact of inflation on underinsurance
The consensus is an asset is underinsured when it is insured only for 90% or less of its true value. The Insurance Council of Australia (ICA) suggests that as of 2021, 83% of all property in Australia is underinsured.
When you take inflation into account, being underinsured poses challenges at claim time, slowing down claim settlements.
2. Is auto-indexation a valid solution for underinsurance?
Auto-indexation is challenging because it sets false expectations and a false sense of security for people. On the other hand, the counter-argument is that something is better than nothing. The underlying issue here is that people might not understand what the replacement of the property is to start with. If the base is wrong, indexing at any percent will not get you closer to the right result.
3. Advice for young brokers to successfully negotiate the best outcomes for their clients in the current environment when looking at a renewal or claim
For renewals, start out as early as possible in understanding your client’s business and establish a clear baseline. Engaging as early as you can is the best thing to do for renewals. With claims, if you can rely on resources such as a claims team, it’s wise to use them. Two heads can sometimes be better than one, especially in a technical area such as claims. Set expectations early. Don’t wait. Having open transparency and clear lines of communication is important.
4. Given high inflation, what management techniques and safeguards are insurers using to prevent claims costs from blowing out and what can brokers do to assist with this?
A lot of good work has been done over the last few years to shore up the supply lines. This is done in an effort to shorten the overarching life of claims and decrease the cost blowout. You can only shore up supply lines and control things as best as you can, but you need to accept that there will be things out of your control. From a broking perspective, you can in some cases help your clients in speeding up the process and cut down wait times. It’s about having that conversation with your client and convincing them about the outcome that’s best for them. As a broker, you can try to make your clients see the benefit in shortening the claim life, which in turn reduces claim costs.
Special thanks to our panellists:
Cillian Browne, Senior Loss Adjuster at McLarens
Marty Sadlier, Director, MCG Quantity Surveyors
Jeff Williams, Broker Claims Manager, Gallagher
Peter Hopkinson, Senior Property Underwriter, QBE
Congratulations to the Young Professionals Committee for putting on such an engaging panel session, especially Oliver Ward and Jasmin Gabrielli who facilitated the discussion on the day.