Brokers voice concerns over underinsurance and accelerated market softening

Prestige Underwriting’s Non-Standard Survey highlights mounting concerns among brokers about the risk of underinsurance for their customers. 

The survey, which gathered insights from insurance brokers across the UK, found that a significant 

84% of brokers reported that the current level of premiums are impacting their clients' ability to maintain adequate coverage. This is further compounded by a striking 92% who believe that more non-standard customers are potentially underinsured due to efforts to economise on insurance costs.

This represents a marginal increase from the 89% reported in Prestige’s summer 2024 survey, highlighting a continued trend of underinsurance within the market.

However, 34% of brokers believe the non-standard segment is also softening at pace creating a disconnect between premium levels and policyholders’ stretched budgets. 

The prevailing consensus is that premiums have yet to realign with policyholder expectations, prompting customers to pare back cover or accept higher excesses; a cost-saving response that is directly fuelling the surge in underinsurance highlighted by the survey. 

Underinsurance is further exacerbated by structural constraints in the non-standard sector, where flood-prone properties and thatched homes often rely on outdated rebuild valuations; soaring material and labour costs, coupled with a limited pool of specialist contractors, leaving sums insured trailing well behind true reinstatement values.

Tim Baxter, Business Development and Relationship Director at Prestige Underwriting, commented:

“These findings underscore the urgent need for greater innovation and flexibility in non-standard insurance offerings. With economic pressures continuing to squeeze both brokers and their clients, it is imperative that we, as an industry, rise to the challenge of providing tailored solutions that address these unique circumstances.”

The survey also sheds light on the perceived lack of customisation in products, with only 47% of brokers agreeing that current offerings from insurers adequately meet the specific needs of their clients. This reveals a substantial gap in the market for bespoke solutions that cater to the diverse and complex requirements of non-standard insurance customers.

Baxter added:

“The data makes it clear that a one-size-fits-all approach is no longer sufficient. Brokers are seeking partners who are willing to listen and adapt to the evolving needs of their clients. Prestige Underwriting remains committed to working closely with brokers to develop products and services that bridge this gap.”