Every broker loves delivering good news at renewal, and a soft insurance market presents an opportunity to do just that. However, the current market conditions also present a rare chance to address widespread underinsurance risk.

The former can keep clients happy in the now, while the latter – involving clients reinvesting cost savings in additional cover – is a harder sell. However, when handled correctly, pushing accuracy can build trust and align your practices with new responsibilities under Consumer Duty.

Buyer’s insurance market in 2026 – and underinsurance

The soft building insurance market of late 2025 has continued into 2026. With abundant capacity and fierce competition among carriers, commercial insurance rates are comparatively low.

Signals suggest this buyer’s market will continue, with insurers doubling down on policy holder retention, as well as business growth.

This creates a welcome environment for brokers to boost retention and new business as well, helping clients to secure 11-30% reductions in their premiums¹.

However, this buyer-friendly climate is unfolding amid chronic underinsurance. While the cost of a policy may be softening, the cost of the underlying risk is not.

The soft insurance market opportunity for brokers and their clients

In a hard market, brokers are often forced into defensive postures, fighting to justify double-digit premium hikes just to maintain existing cover. In a soft market, the saved premium creates a unique financial buffer that can be used to increase a client’s sums insured to accurate levels without necessarily increasing their year-on-year spend.

The scale of the underinsurance exposure

Recent industry data, including the 2026 Aviva Broker Barometer, highlights that this isn’t a marginal issue:

• 71% of commercial properties are currently estimated to be underinsured.
• The average shortfall between declared sums insured and actual reinstatement costs now stands at a staggering 79%.
• 68% of brokers report an increase in claims being reduced or declined due to these discrepancies.

This roughly aligns with the data gathered through Cardinus’ own assessments – 80% of the properties we assess are underinsured. Through our surveys, we have corrected well over £9 billion in underinsurance.

Soft insurance market vs broker responsibilities under Consumer Duty

Under the FCA’s current framework, fair value in insurance is directly tied to its performance at the point of claim. This is now key to insurance broker responsibilities.

If a broker leans on the soft market to facilitate a lower cost policy that they may reasonably suspect is based on an outdated valuation, they are effectively distributing a product that will fail to deliver for the customer. This could expose the broker to Consumer Duty risk.

The “defensible position” for brokers under Consumer Duty

The Consumer Duty doesn’t require brokers to be surveyors, but it does require them to provide competent guidance.

By using the premium savings to fund or encourage professional Reinstatement Cost Assessments (RCAs), brokers create a robust audit trail, achieving two critical compliance goals:

1. Avoidance of Foreseeable Harm: Ensuring the client isn’t hit with an “Average Clause” penalty.
2. Demonstrating Fair Value: Proving that the policy is precisely calibrated, neither wasting premium on overinsurance nor leaving the client exposed via underinsurance.

This also opens the door to structuring cover more effectively, such as applying appropriate day-one uplift percentages to declared values, ensuring policies remain resilient against inflation between assessments.

Find out more about Building Reinstatement Cost Assessments from Cardinus.

How to sell accuracy (ahead of savings) to clients

For many clients, a soft insurance market is seen as a chance to cut overheads. Pivoting that conversation toward reinvestment requires a shift from being a transaction handler to a risk consultant. Here are three strategies to help brokers sell accuracy without losing the goodwill of a lower premium.

1. Uncovering potential insurance gaps

Before you can sell the solution, you have to identify the age of the data. Under Consumer Duty, relying on a sum insured without knowing its origin is a significant professional risk.

For many brokers, the basis of valuation is often inherited from a previous broker or a figure that has simply been rolled forward via annual indexation. In light of this, your first task is to find the valuation date.

Identifying the red flags

If you cannot find a formal Reinstatement Cost Assessment (RCA) in your files, ask the client for the following:

1. The original RCA report: RICS guidance recommends renewing RCAs every 3 years (in most cases). After 3 years have elapsed, a valuation is generally considered out of date and harder to robustly defend. Learn more about RCA frequency.
2. Index-link gaps: If the sum insured has only increased by standard annual percentages (e.g., 3-5%) for several years, it has almost certainly failed to keep pace with construction inflation
3. Market value confusion: If the client points to a recent mortgage valuation or a property sale price, they are likely confusing market price with reinstatement cost.

2. Making sure clients are aware of the risk

The primary cause of underinsurance isn’t a desire to cut costs; it’s a lack of awareness². In many cases, buyers simply do not understand the full extent of underinsurance risk.

Your first talking points should therefore cover the essentials, such as the prevalence of underinsurance and the role of all related aspects.

Essential talking points for building client awareness

• The 7-in-10 statistic: Start with the scale of the problem. Highlighting that 70% of UK properties are underinsured (and 71% of commercial buildings) moves the conversation from “this might happen” to “this is a likely scenario”.
• The rebuild vs market value confusion: Clarify that insurance isn’t based on what a building is worth on the open market, but what it costs to rebuild from scratch. Explain that market dips don’t lower rebuild costs. In fact, labor and material inflation often move in the opposite direction.
• Overview of current rebuild cost factors driving inflation: Discuss labour and skills shortages driving inflations even as materials costs are stabilising.
• The average clause penalty: This is the most critical awareness piece. Explain the math: if they are 25% underinsured, the insurer can legally reduce every claim payment by 25%, regardless of whether it’s a small leak or a total loss.
• The professional fees gap: Remind clients that a rebuild includes debris removal, VAT, and professional fees (architects, surveyors, legal). These costs can add 15-20% to a claim.
• The inflation lag: Explain that annual index-linking has limitations. It rarely tracks the actual volatility of construction materials like steel, timber, or specialised machinery.

3. Selling the reinstatement cost assessment

The soft market gives you the opportunity to lead with a value audit rather than a price comparison. Because premiums are lower, the cost of a professional RCA (and any subsequent increase in cover) is effectively subsidised by the market rates.

A professional RCA helps to demonstrate that the policy meets the fair value insurance expectations under Consumer Duty.

It can be helpful to frame an RCA as a tool for financial efficiency. You aren’t asking them to spend more; you are asking them to ensure they aren’t part of the 23% who are overinsuring or the many more who are underinsured.

Here’s where it makes sense to explain your obligations under the Consumer Duty. Discuss “fair value”, and that your responsibility is to protect them by brokering sufficient coverage that won’t be denied in the event of a claim.

You can say something along the lines of…

“With rates softening, we have a unique window to audit your risk without additional overhead. Rather than relying on indexation, I’d recommend booking a professional RCA. This ensures we aren’t wasting your budget on overinsurance, while simultaneously insulating you from the average clause should you need to make a claim.”

At this stage, costs are likely front of mind for the client. While it’s difficult to offer an estimate due to the variable pricing of RCAs based on property type, now is a good time to mention that, in some cases, a desktop RCA will be sufficient, which will keep costs to a minimum,

Learn how we determine whether a property requires an on-site or desktop reinstatement cost assessment.

If the client is hesitant to move forward with an RCA on the basis that they haven’t had any issues with coverage up to this point, it’s important to point out that past outcomes are largely unrelated to future risks.

4. Managing the outcome: the post-RCA conversation

Once the assessment is complete, you are no longer speaking in hypotheticals. You have the data.

If the RCA caught overinsurance, it’s a great opportunity to build long-term loyalty, as the RCA is leading to immediate additional cost savings on top of those provided by the soft insurance market.

If the old valuation is accurate, reiterate that the cost of the latest assessment is subsidised by the soft market gains, and is reliable (and therefore offers insurance risk protection) for up to three years.

Unfortunately, the most likely outcome based on UK underinsurance statistics is that the RCA finds the client’s property to be underinsured. The way you present this data determines whether the client sees a cost hike or a value win.

To set up the reinvestment of cost savings as a positive, it’s worth discussing the cost of acquiring adequate coverage under normal market conditions:

“The RCA confirms your property is currently 25% underinsured. Normally, correcting this would lead to a steep premium hike. However, because the market is so competitive this year, we’ve secured rate reductions that allow us to increase your cover to the 100% accurate level while keeping your total spend almost identical to last year. You’d be getting 25% more protection for the same budget.”

If the client is concerned, outlining the potential financial impact in the event a rebuild is required can help make them feel reassured rather than unfortunate. Carrying on the above example…

“It would cost £4 million to rebuild your property. You are currently covered for £3 million. If a major fire caused £1 million worth of damage, the Average Clause would be applied. Because you are only insured for 75% of the true value, the insurer would only pay 75% of the claim. You would receive £750,000, leaving you to find the £250,000 shortfall out of your own pocket.”

This highlights that accuracy = peace of mind.

It might also help to explain that the increasing number of insurers refusing to payout due to underinsurance shows that extensive damage isn’t as rare an occurrence as many clients may assume.

5. Reaffirming client control

You can state that your professional recommendation is to reinvest your premium savings into full coverage, but reinforce that the final decision on how to balance the client’s budget against their risk appetite is theirs. 

A responsible way to bring the matter to a close could look like this:

“Whether we proceed with the 100% accurate figure or stay at your current level, I want to ensure you are making that choice with a full understanding of the financial implications in the event of a claim.”

The audit trail checklist

If a client decides to reject the RCA or the increased cover, ensure your files include:

• The recommendation: A record that you advised an RCA or an increase in sums insured.
• The warning: A record that you explained the impact of underinsurance and the average clause.
• The acceptance of risk: A written confirmation (even just an email) from the client acknowledging they have chosen to maintain their current levels despite the data.

Protect clients by advocating for accuracy

Unexpected outgoings never make for an easy conversation, particularly when clients assume cost savings are a given, but with underinsurance still a major issue, it’s a conversation that needs to happen. Advocating for accuracy is now a core part of broker responsibilities.

A Building Reinstatement Cost Assessment from Cardinus ensures an accurate, up-to-date rebuild valuation of your clients’ properties. As a RICS-accredited organisation, we’re held to the highest surveying standards, and our highly experienced network of assessors can evaluate any property type, anywhere in the UK.

Contact Cardinus today to learn more about our RCA service. 

Citations

1. UK Insurance Market Insights: Soft Market Persists, but Conditions Moderate – Aon
2. Broker Barometer 2026: Soft market gives brokers opportunity to tackle underinsurance – AVIVA