For building owners and operators, insurance premiums are a substantial—and often increasing—annual cost. The rise in these premiums can frequently be traced back to the state of the building’s data. With nearly 40% of commercial buildings in the UK underinsured, incomplete or outdated information remains a key contributor to inflated insurance costs. If insurers lack a complete, accurate picture of a building’s value, they must account for the unknowns, often raising premiums to mitigate their own risk. But by providing insurers with verified, comprehensive building data, owners can reduce perceived risks, negotiate more favourable rates, and prevent financial shortfalls.
The Financial Risks of Underinsurance
Underinsurance presents significant risks that extend far beyond the cost of an insurance policy itself. According to a report by the Association of British Insurers (ABI), when a building’s replacement value is underestimated, claims are only partially paid out, leaving owners with significant financial exposure. Imagine a commercial property that has been conservatively valued at £10 million. In the event of a disaster, if it turns out the building actually costs £12 million to replace, the owner would need to cover the £2 million shortfall out of pocket—a potentially catastrophic gap.
This issue is pervasive across the commercial real estate sector. Findings from the Building Cost Information Service (BCIS) reveal that commercial buildings are typically undervalued by as much as 20%. This gap leads to financial stress for owners when claims are made, and property owners are often unaware of the risk until it’s too late. The ABI warns that underinsured properties represent both a reputational and financial risk for owners, particularly in the commercial and multi-tenant sectors where liabilities are shared.
Data Accuracy
Insurance premiums are calculated based on perceived risk. When insurers assess a property with inconsistent or incomplete information, they tend to increase premiums to account for uncertainties. Conversely, when insurers can see a complete and accurate picture of a building’s value and risk profile, they can offer more competitive premiums, confident in the accuracy of the assessment.
Research from the Risk Management Society (RIMS) suggests that properties with thorough, verified data records enjoy average premium savings of 10–15% compared to those with fragmented or outdated records. Digital solutions that streamline data management allow property owners to keep accurate and real-time records of all critical building information, making it easier to demonstrate value and reduce risk in the eyes of insurers. For multi-building owners, even modest premium reductions can lead to considerable savings across a portfolio.
Leveraging Digital Solutions
The role of digital tools in risk mitigation has grown significantly in recent years. Solutions like Building Passport offer a streamlined way to centralise and manage property information—from valuations and building specifications to compliance records. By creating a unified, up-to-date repository for building data, owners gain a single source of truth that benefits both their insurance strategy and their day-to-day operations.
According to research from Marsh McLennan, the use of centralised digital records to manage property data can reduce administrative costs tied to insurance renewals and claims by up to 25%. Additionally, having all property information stored in a single digital platform allows building managers to respond more quickly and accurately to insurers’ information requests, creating a smoother renewal process and often leading to premium savings.
Imagine a commercial property owner who consolidates all property data—asset values, maintenance records, and regulatory compliance—onto a digital platform. When renewal season arrives, they can present insurers with a full dataset that details the building’s assets, recent improvements, and compliance with safety standards. This clarity can facilitate a faster, smoother renewal process and potentially reduce premiums, as insurers see reduced uncertainty and associated risk.
Building Passport has already saved a client 10% on their annual premiums for a large commercial asset by enabling this exact process.
Compliance as a Key Component
In addition to financial data accuracy, compliance with regulatory standards has become increasingly crucial in insurers’ assessments of risk. Since the introduction of the UK Building Safety Act and its ‘golden thread’ mandate, which requires an up-to-date digital record of building safety information, compliance has been a decisive factor for insurers. Properties demonstrating adherence to safety regulations are often considered lower risk, leading to lower premiums.
The Chartered Insurance Institute (CII) notes that properties with comprehensive, regularly updated compliance records are viewed as more stable and manageable by insurers, translating to cost benefits in the form of reduced premiums. For building owners, managing compliance alongside other property data on a digital platform makes the process simpler and less time-intensive, allowing them to meet regulatory requirements while keeping insurers updated.
Mitigating Insurance Costs
A useful illustration is the experience of Grosvenor, a property management firm that adopted a centralised compliance management system to improve its risk profile. By maintaining an accurate, accessible record of each building’s compliance status, Grosvenor was able to reduce insurance costs across its portfolio by approximately 10%, due to insurers’ confidence in the company’s management and documentation practices. This example highlights the direct impact that transparent data and regulatory compliance can have on insurance outcomes.
Immediate Access to Information
One of the greatest frustrations building owners face during a claim process is the time and effort involved in gathering the necessary documentation. For a property with scattered or outdated records, compiling claim information can be both costly and time-consuming. Digital solutions eliminate much of this burden, storing all pertinent data in one place for immediate access. During a claim, owners can provide insurers with all required data promptly, reducing the likelihood of disputes over asset valuation and improving claim success rates.
According to Zurich Insurance, properties with well-organised, digital records have up to a 20% faster claims process. The ease of access to accurate data minimises the likelihood of misinterpretations and disputes, creating a smoother experience for both insurers and building owners alike. Similarly, the renewal process benefits from easy data access, as owners are able to present insurers with updated records and negotiate better premiums.
The Future of Insurance Cost Savings
Looking ahead, digital data management will continue to shape the commercial property insurance landscape. As insurers increasingly recognise the role of accurate, complete building data in risk assessment, the demand for platforms like Building Passport will only grow. For building owners, embracing digital solutions to manage property data isn’t just a matter of operational efficiency—it’s a way to protect assets, ensure compliance, and reduce costs.
Building Passport offers a unique approach to data management, allowing building owners to centralise and verify all critical information, from asset records to compliance documentation. This streamlined approach improves both the accuracy and accessibility of building data, helping owners reduce underinsurance risk, negotiate lower premiums, and gain confidence that their property is valued for its true worth.
For property owners looking to cut costs, mitigate risks, and secure better insurance outcomes, investing in accurate data management is a strategic choice that will only become more valuable as the sector continues to digitalise.
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