REPLACEMENT VALUES IN THE HOT SEAT AS INFLATION HEATS UP
Author of the book, “Everything you need to know about non-life insurance in South Africa’, by AGCS Chief Claims Officer, Thomas Sepp was interviewed by Gareth Stokes of FANews where he explained; “Inflation has reached levels not seen for three or four decades in some countries and is not expected to ease significantly in the coming months.”
Given the recent hike in inflation rates, it is inevitable that the replacement cost of (hypothetically speaking) a section of a building, will be considerably higher than 2 years ago. “The costs of cement, timber and steel have risen dramatically; steel, for example, is almost 50% more expensive than it was a year ago. On average, construction inflation is around 11% to 25% in the US, UK and Germany. In addition, materials are not only significantly more expensive but often simply unavailable due to logistics, shipping, and supply-chain bottlenecks.”
It comes as no surprise that short term policy holders need to evaluate their cover and get in touch with their brokers to ensure that their cover is incremented to account for the increasing inflation and consequent replacement costs.
Ambiton adjusts certain values automatically on the annual renewal of your short-term policy, however care must always be taken to review these adjustments and advise whether they are still adequate for your needs. You might have valued the replacement cost of your watch at R12,000 when you bought it, but the replacement model is now R18,000, which could leave you out of pocket should a claim arise.
To get greater insights on the impact of inflation on claims values, please read the full interview with Thomas Sepp by clicking the link here: