A member in Orange County:
Regardless of the economy, I find that most insureds are reluctant to pay more in premiums whenever higher limits are recommended for whatever reason. Another point is the Marshall & Swift guide is just that a guide.

Here in Orange County, home prices are escalating so rapidly that insurance agents should not be put into a position of being insured's personal financial caretakers. At some point, insureds themselves must accept responsibility. Just as insureds must periodically review their 401k's, personal savings accounts, etc., their homeowners/automobile should be another part of that equation; alas most times it isn't.

An upstate agent (rural) near Rochester:
I would tend to agree that existing Homeowners policies do not adequately cover the high cost of rebuilding. However, insurance companies have become ridiculous when estimating the value of homes when writing up new policies. They are now over-insuring homes in order to reap increased premiums. Marshall & Swift estimators are much too high for our locale so it's not surprising that they think many homes are underinsured. I think we will see lawsuits against companies who refuse to pay the inflated amounts stated in their policies when large claims arise and they will see the back-lash from policyholders.

A member in Steuben County:
I believe that if you go with MSB's full set of r/c criteria which includes debris removal, contractor overheard and a lot of details (which we are not going to get or the insured will not know) you end up over insured. I have been told that their approach to selling their product to the insurance companies as being a way to increase premiums without an increase in exposure. As an agent we now have to deal with several different RC estimators. We can use one company and it comes our at $75/sq foot and go to another it comes out at $125/sq ft. We have to start with our best guess of a replacement cost and then once we determine the company we want to use we have to use their RC estimating system and make correction to our quote to satisfy the company. We spend a lot of time gathering info and inspecting homes to sell a homeowners. Once submitted the company inspects and, in additions to any recommendations, they'll do the RC estimator and we have to review it again, correct their/our mistakes, talk to the underwriter and then if necessary go back to the insured.

We need the industry to adopt a single RC estimator that is fair and simplifies our process. The personal lines business for the independent agent continues to get more complex and time consuming with decreased commissions. Companies are moving to a proprietary Web-based system. As an independent agent with many companies the old comparative rating program is not working as good as it did a year ago. Each company treating financial scores differently and the different tiers has made it difficult for us to compare our options. It would be nice if we could get some uniformity.

A member in Cortland County:
We have in our agency for 25 years used the Boeckh program to do annual updates to our homeowners for replacement costs. The replacement cost estimator business has taken a severe dive since new players and Boeckhno longer being a force. We now have at least 5 different costestimator companies to use depending on the choice of the Insurance Company for their supplier. I have had much confidence in using this prior program for all those years and have had very little problem when there was a loss. Now there is so much disparity between the programs that I no longer have much confidence in telling a client that I am selling them a replacement cost product. The system needs to be better standardized as it was before.

A Schenectady County member:
A survey completed by the effective sole supplier of building cost estimates is self serving at best.

1)Under insured is a term that needs defining. If a home has a market value of $100,000 and a construction cost of $125,000 is it under insured at $100,000? The answer to that is it depends.

2) The software that MS/B has has so many user adjustments that a valuation can differ by over 40% How can any one make an estimates on building costs.

3) The rapid escalation in home bldg costs in New York probably have caused a severe under insured problem. The proper increase in rates and dwelling limits is having a 20-30% increase in premiums for most
homeowners over the past 2 years. This should fix our homeowners line of business problems.

My true beef is with the Monopoly that has been created by the merger of Marshal Swift and Boeckh. Shortly after the merger the rate for estimation software increased by over 400 percent.

A loss control professional located in New Jersey:
In reference to the following item in the September 8, 2004 PIANJ Weekly Reporter:

Insurance-To-Value: Still an Issue. An Aug. 31, 2004, New York Times story relates the plight of a California couple whose home burned in last year’s fires. Using this example, where the couple expected to get about $222,000 from State Farm but their home and contents would cost nearly $400,000 to replace, the article discusses inadequate homeowners’ insurance values. It says Marshall & Swift/Boeckh, a company on which most insurers rely for help in calculating the value of houses, estimates that 64 percent of U.S. homes are underinsured by an average of 27 percent, with some homes underinsured by 60 percent or more. Another company, AIR Worldwide, estimates that many upper-income homes in New England are underinsured
by 30 percent to 40 percent.

My colleagues and I saw the New York Times article as mentioned. However, the date of the article was March 23, 2003, and the title of the article was: “Shock No. 2 Insurance Isn’t Enough to Rebuild”. [Ed. note: there apparently may have been two separate articles.] Prior to that article appearing my colleagues and I believe that most of the properties insurance companies are evaluating from a replacement cost standpoint, so proper insurance can be provided, are approximately 45% to 50% under estimated. We believe that much of
the cause of this “Insurance-To-Value” dilemma stems from the use of estimating programs like Marshall & Swift Boeckh, and the fact that Marshall & Swifts method of calculation is based on zip codes as opposed to actual labor and material cost in a given area. Many insurance companies have been undervaluing properties for quite some time, since they too rely on Marshall & Swift/Boeckh. However, a few other carriers like Chubb and St. Paul Travelers Insurance, rely on in house certified estimators or estimators such as those found at Cost Calculations to establish their replacement cost values.

As a loss control professional, I have been asked numerous times to develop replacement cost values for various types of properties. The only system available to me, until discussing this issue with my
colleagues was Marshall & Swift/Boeckh. After making a few comparisons with replacement cost estimates developed by a Certified Professional Estimators program and replacement cost estimates developed by me using Marshall & Swift/Boeckh, there was always a large discrepancy, approximately 45% between the two
developed values, (my replacement cost using Marshall & Swift/Boeckh, being lower).