Why your home insurance premium might increase this year

There are a combination of factors affecting home insurance premiums which have created a “perfect storm” for insurers and clients. Percentage premium increases this year are in double figures, across most home insurers and we have a “hard market” which means that underwriters are being less flexible and often offering a take it or leave it approach. This compares to years of “soft” markets where we could negotiate premiums, more relaxed terms and minimal increases following a claim.

By the end of last year, insurers were imposing rate increases due to:

• New insurer solvency rules.
• The high cost of casualty insurance has risen beyond that which insurers were expecting. Casualty insurers were hoping that their Property Insurance profit would help offset this and that 2020 would be a good year with no big claim incidents.
• Increased frequency of storms in the UK and the effects of global warming generally. Storms Ciara and Dennis happened early in 2020. These were both 1 in 100 year events. Property rates were already too low to cover the cost of claims which are expected to be circa £425 million¹.
• So, things were already looking poor. Then Covid-19 Struck. The cost to UK insurers is circa £1.2bn², including business interruption claims, travel insurance claims, and wedding insurance and other event insurance claims.

• In July 2021 there were two flood events in London affecting many private homes. The estimated cost to this is £281m³
• The costs of building materials and labour has skyrocketed due to Brexit, Covid and the war in Ukraine

In 2023 we’re seeing double digit indexation on the buildings and contents figure, with some insurers increasing sums insured by as much as 19%. This has to be reflected in premiums, just for underwriters to stand still on any profit.  We’ve seen insurers and underwriters pull out of the UK home insurance market altogether rather than try to weather the storm, this further exacerbates the problem as there is less supply.

Whilst home insurance isn’t just about price, now more than ever is the time to ensure your broker is working hard to get you the best combination of cover and price.  If you don’t have a broker, use an experienced broker like Howden Private Clients to advise and guide you to a new policy this year.

To speak to us about your home insurance call 020 7543 2801 or email privateclients@howdeninsurance.co.uk

Get in touch with us here to find out more. 

Sources

1. https://www.cityam.com/storm-dennis-and-storm-ciara-could-cost-insurance-industry-425m/
2. https://www.abi.org.uk/news/news-articles/2020/04/covid-19–payouts-of-over-1.2-billion-likely-to-be-made-to-customers-according-to-latest-estimate-from-the-abi/
3. A retrospective look at summer 2021 London flash floods | JBA Risk Management