This month we welcome a new Account Executive to the HM Family, Lee Gavin. Lee comes to us with over 20 years experience in the Insurance industry and specialises mainly in the Property sector as well Commercial Business. This month Lee is talking about some of the most pressing issues for property managers / owners and how we can help you with any issues you may have. 

Being a “Trusted Advisor”, I have spent over 20 years in the insurance industry.  Most of this time has been spent purely in the Property sector. I realised early in my career, that insurance broking gave me the variety I seek in my day to day work.  There are so many different elements to the role as a Senior Account executive, which provides any business minded individual with real opportunities to shine. Variety is the spice of life they say; well it works for me.

I do really enjoy the role I play in an organisation and this is very important.  The enjoyment of helping and understanding client’s specific needs, and delivering with the hope to exceed expectations.  One of the most important things to remember is to remain focused; with a strong will for successful outcomes for your clients, whether that is to arrange a new long-term arrangement or, getting the best settlement possible in the event of a claim.

So now then this leads me on to some sound, solid advice for Property Professionals & Property Owners.  In my opinion, here are a few areas of risk management that certainly needs reviewing over the next 12 months and beyond.

1. Property Owners Liability (commonly known as PL cover);
2. Underinsurance – “40% of all buildings surveyed generally have underinsurance issues”.

Property Owners Liability (commonly known as PL cover).

You must understand the change in the Ogden Discount ruling regarding severe injury claims, and how this will affect you going forward.

What is the Ogden Discount Rate?

This is applicable where a severely injured person needs to have the necessary financial security to provide for their care and loss of earnings. The discount rate is used to calculate the amount of compensation they receive, taking into account the return they will earn when that money is invested.

The Effect of the Change

The reduction means that those suffering from serious injuries will receive significantly higher compensation payments than before with insurers now having to effectively pay extra, rather than discount the compensation amount.

Let’s discuss your needs in detail, don’t just accept off the shelf products with limited PL, speak to experts in the field, ask for help, and if the broker doesn’t know this information, then this would be a concern for me. Change brokers!  What are my options?  I can help you understand your risk solutions for effective risk management in this specific area of cover.

Underinsurance – “40% of all buildings surveyed generally have underinsurance issues”.

Underinsurance is a big issue in the industry, but it shouldn’t be if you follow some simple steps!

When purchasing insurance, the premium is calculated on the buyer’s individual circumstances and the amount of cover they decide to take out to protect their business.  Your whole insurance contract which is legally binding, relies upon the correct “Day One Reinstatement Cost Assessment” figure (RCA’s).  If you have not reviewed these sums – why?  Who pays in the long term if these assessments aren’t carried out, unfortunately it is you the Property Owner that will bear the costs that could put your business at risk.

If Underinsurance is spotted by the loss adjuster following a large claim, it all becomes a very technical process, which halts the entire claims process, and could be the difference between staying in business or, watching your dreams disappear with one large loss.  You will end up funding the works yourself, and fighting for every £ whilst the property is being rectified following damage.

Underinsurance is what happens when the correct amount of insurance hasn’t been taken out from the outset.  Insurers can apply a term called “Average “to the final settlement figure; which is the % portion of underinsurance taken off the claim cost.  Average can also delay and effect your Business Interruption / Loss of Rent claim, and people do not seem to realise the headache this will cause the property owner.

It is not a surprise to me that when considering how big the problem is that specialist RCA advisor, Barrett Corp & Harrington, advises that on average 77% of the properties they survey are underinsured by 45%. Therefore, this is a huge problem in the industry and something that all professionals should sit up and take note.  I have worked with Martyn Barrett on many large projects and its clear to me that it’s a lot more technical than you can imagine, advising on the correct sums, and making sure materials may be available and understanding the true cost of “full reinstatement”.

What to look out for?

• If the property is listed;
• If the building is made of stone;
• If the building was constructed before 1920;
• If the building has never had a valuation or it’s been more than 10 years;
• If the building is eco-friendly;
• If the building has recently been altered in anyway;
• If the building Is in a strange location with access issues;
• If the building has been extensively refurbished throughout (what were the costs of the works etc);
• If the building has extensive external features;
• If the building’s value has been based on a developer’s costs;
• If the building’s sum insured has been based on market value (this value has no bearing on the RCA and should never be used in setting insurance sums to be insured under a full reinstatement policy;

How can I protect myself?

Contact me to understand your options regarding “Average Waiver” on insurance policies, so that you are never in a position where the unthinkable happens. Contact me to discuss what this all means for you, and how to protect yourself in the current climate.

My Priority is helping clients get the sums on the right basis from the outset.  I have access to some of the most professional RCA experts in the industry.  I am here to help you get a better understanding of your obligations to your business/shareholders/tenants/ insurers.

What should I do to start the process of reviewing the items mentioned in this article?

Well speaking with me and obtaining guidance / advice would be a good start. There is no hard sell here; this is risk management after all, the area that you need to fully understand.

To speak further with me regarding any of the above, please feel free to contact me on 01905 721264, or email me [email protected].