The home insurance market

The home insurance market

The insurance market, specifically the UK home insurance market, has changed over the last few years and we’re now experiencing a hard market. A hard market is brought about by a reduction in insurers’ capacity and their appetite to write insurance. But what are the reasons behind this? Client Director Steve Moores takes a look.

UK home insurers are experiencing loss-making years. According to an Ernst & Young report, in 2022 the UK home insurance market experienced its worst performing year on record as insurers were heavily impacted by major weather events, high inflation, supply chain pressures, and an increase in claims frequency¹.

This continued into 2023 where, according to the Association of British Insurers (ABI), insurers dealt with 36,000 claims following Storms Babet, Ciran and Debi. The full insured costs for these storms will not be known for several months, but it is expected to reach £560 million². The start of 2024 has been no better, with a number of winter storms including Storm Henk set to cost insurers £150m³.

As well as the volume and frequency of claims, claims costs for insurers are rising. Inflationary pressure is increasing the cost of contents and particularly buildings, but they’re also increasing due to the delays caused by Covid, Brexit and the shortage of both labour and materials. So a three-month repair may now take six months, causing a knock-on increase in claims administration and, more importantly, alternative accommodation costs. 

What does this mean for consumers?

Whilst premiums increased over the course of 2023, challenges remain as insurers continue to be impacted by major flood and storm events - most recently Storms Isha and Jocelyn.  We’re therefore seeing premiums continuing to rise and underwriters being more strict with their renewal terms. We’re also seeing insurers, such as Home & Legacy, Aurum, Horizon and Confidas, leaving the market. Their customers are not being offered a renewal and new clients aren’t being offered a quote. In addition to this we’re finding an increasing number of clients being refused a quote for insurance due to a less than perfect claims history or the ‘risk’ not being perfect from an underwriter’s point of view.

How can Howden help?

A hard market doesn’t mean a hard no. Now more than ever is the time to ensure a broker is working hard to get you the right home insurance policy. Here’s what we do:

• By using our extensive market knowledge, leverage, and relationships we can negotiate with insurers to get you a good and fair price.
• We will look at your property and make security recommendations before we go to the insurers. This can include safes, alarms, cameras, or even locks. All these lower the risk for insurers and will give them more confidence to provide their best quotations.
• By taking the time to talk to you we can identify opportunities to obtain discounts. For example, discounts due to occupancy, floating limits for jewellery, or a higher excess or voluntary excess. For more advice on this, read our article: Ways to manage your home insurance premium.
• If you’ve been refused insurance due to a previous claim, we’ll break down the insurance cover required and negotiate with insurers. We’ll also speak to underwriters and explain any particular circumstances around a claim. Ultimately, we deal with people, and when events are explained clearly it will always translate better than something written on a piece of paper or held on a computer.

Homeowners might think that by cutting out a broker they’ll benefit from cheaper insurance – however, there are many benefits to using an experienced insurance broker like Howden. To speak to us about your home insurance, call 020 8256 4901 or email privateclients@howdeninsurance.co.uk

Sources:

1. https://www.ey.com/en_uk/news/2023/10/uk-home-insurers-experienced-the-worst-performing-year-on-record?
2. https://www.abi.org.uk/news/news-articles/2024/2/the-cost-of-home-insurance-rises-as-insurers-support-customers-and-battle-cost-pressures/
3. https://www.theinsurer.com/news/uks-storm-henk-to-cost-insurers-up-to-150mn-pwc/