A growing number of brokers fear that more households are falling into underinsurance as rising premiums force customers to cut back on cover, according to new research from Prestige Underwriting.

The specialist insurer’s latest Non-Standard Survey found that 84% of brokers believe current premium levels are affecting clients’ ability to maintain adequate protection. An even higher proportion – 92% – said more non-standard customers are now at risk of being underinsured as they economise on costs.

This marks a small but persistent rise from the 89% recorded in Prestige’s summer 2024 survey.

DISCONNECT

Brokers also voiced concerns about a widening disconnect between policyholder budgets and the cost of cover, with 34% warning that the non-standard segment is softening rapidly despite elevated prices.

Many said clients were paring back their protection or accepting higher excesses in an attempt to save money, a trend directly contributing to the increase in underinsurance.

Structural pressures are compounding the problem. Properties prone to flooding and thatched homes are often still assessed using outdated rebuild valuations. Soaring material and labour costs, alongside a shortage of specialist contractors, have pushed reinstatement costs well above the sums insured on many policies.

Tim Baxter, business development and relationship director at Prestige Underwriting, said: “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.”

DISSATISFACTION

The survey also found dissatisfaction with the breadth of products available. Fewer than half of brokers – 47% – felt that current insurer offerings meet the specific needs of their clients. Prestige said this suggests a significant opportunity for more bespoke solutions that better reflect the complex requirements of non-standard 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.”