General Insurance Article - Construction cost inflation risks firms being underinsured


UK Construction Material Price Index rose 26.4% in just a year. Raw material shortages and rising energy costs causing building costs to skyrocket

 Rising construction costs in the UK and globally risk leaving homes and businesses underinsured if properties suffer damage from natural catastrophes, such as storms or floods, warns Chaucer, the leading specialty (re)insurance group.

 Escalating construction costs mean that many existing policies are now far less likely to be sufficient to rebuild properties damaged by natural or man-made events.

 In the UK, the Construction Material Price Index increased by 26.4% in just one year. This has been driven by increases in concrete reinforcing bars (58.2%), fabricated structural steel, which has gone up 46.3% in a year and pre-cast concrete products (up 28.3%).

 This trend has been observed globally, for example, the United States has seen costs jump by 19.2% in twelve months, the largest spike in more than 50 years.

 The crisis in Ukraine has contributed to greater levels of volatility in global energy costs, pushing up the processing and freighting costs of raw materials. Furthermore, sanctions against Russia have made raw materials more difficult to source, which has also served to push up prices.

 Based on a rise of 25% in rebuilding costs, if a property that was insured against a value of £1m needed to be rebuilt entirely, it could now cost £1.25m. Therefore, policyholders would need to either finance the £250k difference themselves or pay for more coverage.

 Chance Gilliland, Head of Global Property Delegated Authorities at Chaucer says: “Rapid inflation in building costs risks creating an insurance gap. Those based around coastal regions, which are more exposed to extreme weather are at greatest risk.”

 “Policyholders need to review their coverage to ensure that they will not be left underinsured should their homes and business premises suffers damage.”
  

Back to Index


Similar News to this Story

Sleighing the risks by giving Santa the insurance he needs
While you might be the most magical employer in the world, we know that even you aren’t immune to the risks of running a global delivery service! From
Diversity improving in insurance and long term savings
Key figures from the Association of British Insurers’ latest Diversity, Equity and Inclusion (DEI) data collection highlight the work of insurers and
Almost a third of homeowners have been victims of burglaries
Research commissioned by Co-op Insurance reveals that almost one in three (29%) homeowners have been the victims of theft from their home. The member-

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.