Hiscox is to update its underwriting rules on buildings cover to reflect the difference in rebuilding cost between stone and brick properties. BCIS has developed a data set which enables Hiscox to identify the ratio of brick to stone built properties by postcode and calculate its premiums accordingly.
Rebuilding costs for properties constructed of stone can be 60% higher than those constructed of brick. BCIS recognised that those insurers grouping brick and stone together as ‘standard construction’ are losing premium income and risking higher loss ratios. The brick and stone data set was developed to plug the identified gap in the market and allow insurers rates to be data driven rather than retrospectively adapted to improve loss ratios.
Hiscox is committed to using data to more accurately assess and price risk, to the benefit of the business and its customers. Steve Mayfield, Head of Direct Household at Hiscox comments: “We believe this new data set from BCIS will help us better assess the true rebuilding cost of stone properties and price them accordingly. Enhancing our pricing capability enables us to attract and retain a better mix of business and thus improve our profitability.”
Andrew Thompson, BCIS Director says: “Stone built properties account for around 10% of the overall residential building stock in the UK and tend to be clustered in regional pockets throughout the country. We believe insurers are underestimating their exposure and the subsequent impact on their bottom line by grouping brick and stone together as a standard construction risk. It is for this reason we have developed the brick and stone data set, which complements the BCIS Notional Rebuilding Cost Matrix, containing 2.6 million rebuilding cost figures.”
