Los Angeles - Undervaluation statistics for the U.S. homeowners business have continued to improve since 2004, according to Marshall & Swift/Boeckh (MS/B), a provider of building cost data and estimating technology to the property insurance industry.MS/B has been tracking home valuation statistics since the early 1990's and reports it as the MS/B ITV Quality Index". In 2005, MS/B's research shows the percentage of undervalued U.S. homes has dropped over the prior year from 61% to 59%, and the average percentage of undervaluation has improved from 25% to 22% across the industry. This is a significant improvement from five years ago when approximately 73% of homes in America were undervalued by an average of 27%, according to MS/B.
This improvement represents a continuation of the insurance industry's efforts to adopt risk-specific valuation tools and "best practices" strategies to both new and renewal property business, says Bob Dowdell, chairman of MS/B.
Over the last few years the MS/B ITV Quality Index has shown steady improvements in the undervaluation results. The net impact of the improvement in undervaluation has been substantial ever since the conversion from square foot to total component estimating methodologies began, MS/B claims.
Prior to 2000 when the insurance industry began adopting component estimating, it was estimated that undervaluation could cost the U.S. property industry nearly $8 billion in lost premium revenues. As component estimating proliferated, this number improved drastically. Nearly $4 billion of these lost premiums have been collected as policy coverage has been more properly aligned to better protect each individual home.
Source: Marshall & Swift/Boeckh (MS/B), an MDA company
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