Broker concern over underinsurance in UK non-standard market & accelerated market softening: Prestige

A new survey by Prestige Underwriting has highlighted growing concerns among UK insurance brokers about the disconnect in the non-standard market, where an increasing number of clients are underinsured amid a softening market.

The Prestige Underwriting’s Non-Standard Survey, which gathered insights from 99 insurance brokers across the UK involved in the non-standard markets, revealed that a significant 84% of brokers have reported that the current level of premiums are impacting their clients’ ability to maintain adequate coverage.

A significant 92% of respondents also believe that more non-standard customers are likely underinsured as a result of their attempts to reduce insurance expenses.

This figure represents a marginal increase from the 89% reported in a previous Prestige survey in summer 2024, highlighting a persistent and deepening problem.

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 survey highlighted that premiums have yet to realign with policyholder expectations. With insurance prices being too high for many people, many customers are either buying less comprehensive policies or agreeing to pay a larger portion of any claim themselves in order to save money.

These actions, while saving money in the short term, are directly causing a significant increase in the number of people who are underinsured to cover their potential losses.

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by structural constraints in the non-standard sector, where flood-prone properties and thatched homes often rely on outdated rebuild valuations; soaring material and labour costs, coupled with a limited pool of specialist contractors, leaving sums insured trailing well behind true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 shed light on a perceived lack of customisation in current product offerings. Only 47% of brokers agreed that existing policies from insurers meet the specific needs of their non-standard clients, revealing a significant gap in the market for bespoke solutions.

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.”