Underinsurance is becoming far more visible across the insurance market, with brokers reporting that it is now having a direct effect on the outcome of claims. Aviva’s latest Broker Barometer suggests this shift is gathering pace, and many firms are feeling the consequences when something goes wrong.
What Brokers Are Reporting
A growing number of brokers say claims are being reduced or declined because cover limits do not match the actual cost of repairing or rebuilding. According to Aviva’s findings, 68% have seen more claims fall short for this reason. With this in mind, 82% of brokers say they intend to use the softer market conditions to help clients take a closer look at their policies and check whether their cover still reflects the real value of their business assets.
What the Data Shows for Commercial Property
Aviva’s own review of commercial property business written in 2025 shows how widespread the problem has become. The insurer found that 67% of policies examined underinsured, and the gap was significant. On average, sums insured were 79% below the estimated cost to rebuild. It is no surprise then that 68% of brokers say underinsurance continues to be a major concern for their commercial clients.
This gap is no longer an abstract risk discussed only at renewal. Many brokers are seeing the impact when clients turn to their insurance after an incident. More than half say customers are experiencing financial pressure when claims do not stretch far enough, and 37% say inadequate business interruption cover is disrupting how companies operate after a loss. Sadly, some businesses do not recover at all. Brokers report that 26% of affected clients have had to close, while 20% have seen job losses as a direct result.
Understanding What Is Driving Underinsurance
One of the most striking findings in this year’s barometer is that cost is no longer the main reason customers remain underinsured. Last year, 47% of brokers cited price as the biggest factor, but that has now fallen to 29%. Instead, 40% say clients are simply unaware that their cover limits are out of date. Another 33% say inflation is not well understood, and 32% believe policy wording continues to be a source of confusion.
A Chance to Reset Cover Levels
Jason Chambers, director of innovation for Commercial Lines at Aviva, says underinsurance is becoming a habitual issue rather than an occasional oversight. With index only adjustments currently around 4.4%, he warns that relying on small increases at renewal could leave gaps in cover for many years. When this happens, a minor setback can quickly become a far more difficult event for a business to manage.
He also highlights the softer market as a genuine opportunity. Lower premiums mean there is more flexibility for clients to update their cover and ensure their sums insured match the real cost of repair or rebuilding. Jason encourages brokers and insurers to work together with customers to close these gaps and build stronger, more resilient businesses for the long term.
If you’re unsure whether your business is properly insured or would like support in reviewing your current cover, our team is here to help. Speak to one of our experts today by calling 02920 853788 or emailing contact@thomascarroll.co.uk for tailored advice and peace of mind.
