Warning from roof plumber on building price increases.
Flying home from the Australian Insurance Law Association Queensland Division’ conference where I had been a guest speaker on Friday, I was sitting next to a plumber. We chatted for a while and we discussed the issues facing his business. It was clear that the two speed economy was biting into his business and due to increases in materials (roof sheeting) of 30% over the past 2 years his profit margin was under great pressure.
Alarmingly he advised me that steel roofing sheeting will increase in price again by 4% from June 1. I naturally asked if this was due to the Carbon Tax but he was not sure. His suppliers had not provided any reason.
Two of LMI Group’s senior team: Engineer, Fergal O’Connor; Business Analyst/Forensic Accountant Angus Stewart and I, are modelling what we expect the price increase to homes and commercial buildings to be come July 1 when the tax comes in. I will publish our estimates in early June 2012.
Whether it is the manufacturers getting in early on the Carbon Tax for political or greed issues or it is for other reasons the fact is that this means that one important component of most buildings, homes and commercial has increased in price over the past 2 years and continues to do so.
It is yet another reminder to us all that Insureds need to do a proper valuation on their assets based on the current reinstatement and replacement values each and every renewal. Leaving the sum insured or declared value as it was last year just will not cut it should they be hit with a significant insured event.
With the penalties for under-insurance being so high, to the point that some business owners fail, it is encumbent on every broker to remind their clients of the risk they take if they do not insure fully.
I have developed tools such as the Under-Insurance Calculator and Building Cost Calculator available on http://www.lmigroup.com/riskcoach/ or free from the Apple Apps store for iPhones and iPad (search on LMI Group) to assist brokers get the message across and I offer them to you.
Angus, Fergal and I will get the expected increases up as soon as we can.