3 Barriers That Lead to Misreported Property Values, and Why Accuracy Matters More Than Ever
White Paper Summary
Underreporting of property values is a chronic problem for the commercial insurance industry. Underwriters cannot accurately evaluate the size and scope of a risk or price it appropriately if risk managers submit incorrect estimates of their property’s worth.
When valuations are low, the premium charged will be lower, too. That may be great news for the risk manager initially — until a total loss occurs. When coverage doesn’t sync up with risk, policyholders can be left exposed or insurers end up paying more than they planned to. Either way, the client-carrier relationship can go sour.
“We take the valuations submitted by our insureds very seriously. We use those numbers to model risk, project loss estimates, set a line for limits and determine pricing. They are the basis of the property insurance contract, and we expect them to be accurate,” said Michele Sansone, President of North America Property, AXA XL.
“If the value is wrong, we won’t find out until a claim happens, and that’s where we run into big problems.”
Businesses fail to submit accurate valuations for several reasons. Here are the top three reasons why valuations go wrong, and why it is so important to get them right:
To learn more about AXA XL, please visit their website.