Accurately Determining Insured Values: The repercussions of inflation

With Kristjan Kristjansson, Senior Director, Appraisals.

Inflation, an ever-present concern in today's economic landscape, poses formidable challenges for insurers, businesses, and individuals alike. As prices continue to soar and economic conditions fluctuate, accurately determining insured values becomes crucial.

The repercussions of inflation are particularly evident in the construction industry, where escalating costs of energy and raw materials make property repairs and rebuilding exorbitantly expensive. This, in turn, places insurers and policyholders in a precarious position, grappling with increased costs and the subsequent impact on claims. In this article, we will explore the far-reaching effects of inflation on insurance claims, the importance of reassessing insured values, and the significance of collaboration with specialist appraisal companies. Moreover, we will highlight the pivotal role insurers play in ensuring adequate coverage and provide practical steps for individuals and businesses to navigate the challenges of inflation. By taking proactive measures and seeking expert guidance, we can mitigate the risks associated with inflation and safeguard ourselves against potential future claims.

Here are a few ways that you can accurately determine insured values in this ever-evolving environment:

Soaring Construction Costs: Rising prices of energy and raw materials significantly impact the construction industry worldwide, making property repairs and rebuilding more expensive. Insurers and policyholders face challenges due to increased costs.

Effects on Claims: Inflation drives up the cost of insurance claims, especially in the property and construction sectors. Material and labour prices directly influence the expenses associated with repairs and rebuilding. Scarcity and delivery delays further inflate business interruption claims. Insurers must be prepared for rising claim costs.

Determining Accurate Insured Values: Regularly reassessing insured values is crucial to prevent underinsurance. Fluctuating economic conditions require close monitoring of asset values. Proactive reassessment ensures adequate coverage and full reimbursement in case of a claim.

Collaboration with Specialist Appraisal Companies: Working with appraisal experts helps accurately calculate property values and determine insurance values. These specialists navigate complexities in an inflationary environment.

Insurers' Role in Ensuring Adequate Coverage: Insurers guide clients in updating asset values and raising awareness about the impact of inflation on claims. Collaborating during renewal bridges coverage gaps and provides comprehensive protection.

Inflation significantly impacts insurance claims and asset valuation. Rising construction costs make repairs more expensive. Proactive reassessment of insured values and collaboration with experts is essential to prevent underinsurance. Insurers, businesses, and individuals must adapt to ensure adequate protection in the face of rising inflation. Take control of the risks of inflation and its impact on your potential future claim by engaging a qualified member of our team today.