Property intelligence company CoreLogic New Zealand has produced a full-replacement digital insurance calculator, after research showed up to half of the homes in the country are underinsured by at least 10%.

“It’s designed to be far quicker and far easier than existing online tools,” Client Director for Insurance Solutions Richard Deakin told insuranceNEWS.com.au.

The Sum Sure tool will initially be offered to insurers and other users in New Zealand, before extending to Australia later this year.

CoreLogic NZ’s research indicates about 750,000 homes are not covered for their full replacement cost.

With the nation’s housing stock worth about $NZ786 billion ($727.71 billion), the shortfall equates to about $80 billion ($74.07 billion).

Mr Deakin says the Sum Sure tool combines detailed property data with insurance estimation technology from CoreLogic US, which is used by 72% of insurers there.

Insurers can either present the tool on their websites or use it in portfolio valuation to identify areas of underinsurance.

In the US, the tool has shown that insurers’ standard three-year replacement value adjustments using index ratings can be inaccurate by 16% and five-year estimates can be out by 25%.

Mr Deakin told insuranceNEWS.com.au New Zealand homeowners often miscalculate rebuild values since the country moved to a sum-insured model about two years ago following the Canterbury earthquakes, amid pressure from reinsurers.

Previously, it was one of the few countries in the world still using a replacement-value model.

CoreLogic NZ has been developing the tool for the past nine months, and Mr Deakin says insurers’ early responses are “hugely positive”. 

But no client commitments have been received because the tool must first undergo a “validation” period of testing and demonstration.

“We have been engaging directly with the insurance community and the Insurance Council of New Zealand, so they are aware of the tool,” he said. “Those talks are ongoing.”