Telecommunications, energy and petrochemical companies are underinsuring their industrial assets by 30% to 60% in Asia, according to a new report by Marsh, and John Foord, an industrial asset valuation firm in Asia.
The report said that many companies are not taking into account recent fluctuations in commodity prices, material and labour costs and are consequently underinsuring the full replacement value of their assets.
In addition, companies may also be relying on outdated asset registers which apply simple inflation indices that often do not accurately reflect true asset values.
Jason Wells, managing director and leader of speciality practices for Marsh in Asia, said: "In our experience, the extent of underinsurance in Asia is more widespread than in more developed regions.
"Last year's devastating floods in Thailand were a stark reminder of how serious the problem has become.
"Firms often only become aware when they make a claim and discover the sum insured does not cover the replacement cost.
"We urge companies to perform regular asset valuation 'health checks' - at least once every two to three years - so that the sums insured can be both accurate and adequate."
Graham Copland, managing director of John Foord, added: "We reviewed nearly 100 asset valuations performed in the telecommunication, energy and petrochemical sectors, and compared the true replacement value with the sum insured.
"The findings speak for themselves, with an average of 30% underinsurance, with several instances of up to 60%."
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