Mij Gibson Oct 26, 2020
An estimated 4 out of 5 Australians are currently under insured says Corelogic in a recent article on how insurers can drive customer engagement using its Property Monitor service.
According to the article Australian property owners are unlikely to re-evaluate their insurance needs unless they change properties or after a poor claim experience. Once they have chosen a provider they are unlikely to review their sum insured amount, even if their circumstances change, or they make improvements to their property.
This says Corelogic can leave homeowners in a vulnerable position, especially from disasters that include a storm, flood, bushfire, earthquake or house fire. They could be left out of pocket when they need to make a claim especially if the cost to rebuild their property is higher than the sum the property was insured for. This will only “exacerbate their loss and trauma – and may lead to reputational damage or litigation risk for the insurer”.
Insurers can help mitigate this risk by recognising and acting on key drivers that cause the cost of rebuilding to change. This includes renovation, especially with renovations across Australia at a peak.
With Property Monitor, insurers will be able to identify customers who are currently embarking on home renovations, are buying, selling or listing their property for rent, or who have reached the anniversary of their settlement of sale.
Property Monitor will notify insurers when their customers are rebuilding or extending their home, adding a pool, a shed or a garage or any other renovation that requires DA approval. This information will enable insurers to proactively engage with their customers and encourage them to revisit their sum-insured amount.
This takes the onus to inform the insurer off the homeowner, who may overlook this crucial task amidst the many steps involved in a renovation.
14,200 approved Development Applications on average per month across Australia are captured in the Property Monitor database. By identifying and flagging a customer’s intention to improve their property, insurers will be able to reach out to them with relevant content and cover options, ensuring maximum cut-through.
By reaching out at the start of their renovations, insurers will also be able to protect customers who may have unwittingly void their home insurance policy.
This will enable property owners to get their cover amount up to date.
So what type of information does Property Monitor provide, and how does this help insurers?
According to the Australian Bureau of Statistics in the first eight months of 2020, there has been 113,635 applications across Australia with approved DAs. The total cost of alterations and additions that did not create new dwellings is $5.53 billion – up from $5.46 billion in the same period of 2019.
There were also renovations consisting of smaller items, such as pergolas/patios, garages and sheds (valued up to $296,363) as well as the larger items like multi-dwellings and duplexes (valued up to $2.35 million).
These numbers alone are a compelling incentive says Corelogic for insurers to ensure that their customers have proper cover protection in place. Further, in light of COVID-19, the Federal Government’s grant of $25,000 to help homeowners renovate or build new homes should also encourage a spike in renovation rates, further exacerbating the risk of under insurance that Property Monitor can help combat.
We recommend that property owners check to ensure they have proper cover protection in place by updating their property insurance.