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Catherine Carey
By
June 09, 2022

Home insurance premiums find a new equilibrium following pricing rule step change

Home insurance premiums find a new equilibrium following pricing rule step change

  • Home insurance premiums have risen
  • This signifies a one-time ‘step-change’ in response to the new FCA pricing practices

After the sudden upsurge in the cost of home insurance recorded at the start of the year, it appears that premiums are now beginning to find a new level, according to analysis from Consumer Intelligence, published in its latest home insurance price index.

 

The index provides an aggregated view of average insurance premium movements across price comparison websites and key direct insurers. The latest data reveals that the average premium for home insurance rose 2.3% in the three months to April 2022.

 

“After the stark uptick in January, rate increases have since slowed with only a 2.3% rise in the last quarter, compared to an increase of 12.9% over the past six months,” says Harriet Devonald, product manager at Consumer Intelligence.

 

New rules that came into force in January 2022 to tackle the practice of “price walking” initially instigated the biggest one-month jump in home insurance premiums in eight years.

 

The new General Insurance Pricing Practice (GIPP) legislation means insurers can no longer offer new customers enticingly low premiums to win their business. Renewing customers must also be allowed access to the same deals as a new customer.

 

“The main change is that it’s forced new business premiums up across the board,” adds Devonald.

 

Today, an average buildings and content policy costs £156.

 

Long-term view

In the 12 months to January 2022 the average premium for home insurance rose 2.9%. In contrast the average premium for motor decreased by 2.8%.

 

Miskelly continues: “This data may seem conflicting, considering we’ve just seen the highest single-month increase of average premiums. However, January’s premium hike was preceded by one of the most sustained and sharp periods of deflation on record.”

 

Since Consumer Intelligence first started collected pricing data (February 2014 for home and October 2013 for motor), the average premium for home insurance has risen a modest 2.7.%, kept in check by a highly competitive market. In comparison, the average premium for motor insurance has risen 17% since records began.


Into the regions

Londoners continue to pay a hefty premium for their home insurance, ranking streets ahead of any other UK region.

 

At £212 for a typical buildings and contents policy, households in London pay considerably more for their insurance than the next most expensive areas – the South East (£158) and Eastern (£154) regions.

 

The North East (£130) is now the cheapest region for home insurance, followed by the South West (£142) and East Midlands (£146).

 

Over the last 12 months, Wales (11.9%) has led the way with pricing increases – with the West Midlands (8.0%) and the South West (7.4%) other notable risers.

 

All UK regions have seen their home insurance rise in the last 12 months, but the smallest gains have been recorded in Yorkshire and the Humber (4.5%), Scotland (5.2%) and the North West (5.5%).

Age differences

Under-50s households (£160) continue to pay slightly more for their home insurance, with the over-50s typically paying just £150 for an annual policy.

 

Both groups saw their insurance costs increase over the last 12 months. However, the over-50s (9.0%) saw premiums rise at a faster rate than our younger under-50s cohort (5.1%).

 

Property age

Victorian-era homes built between 1850 and 1895 recorded the biggest increases to their premiums over the last 12 months – with prices rising 11.6%.

 

Other property age groupings to see significant rises to their home insurance over the last 12 months were for homes built between 1940 and 1955 (8.2%) and the period 1955 to 1970 (7.5%).

 

Older homes continue to attract the highest premiums – with houses built between 1850 and 1895 costing £184 to insure, while those built more in the Edwardian era (between 1895 and 1910) now carrying premiums of £174. The cheapest properties to insure continue to be newer builds – erected from the turn of this century – with a typical home insurance policy now standing at just £144.

 

 

Consumer Intelligence Home Insurance Index - Overall

Date range

Overall

Age <50

Age >=50

All months

Feb 2014 to Apr 2022

5.1%

1.8%

9.6%

Last year

Apr 2021 to Apr 2022

6.7%

5.1%

9.0%

Last 6 months

Oct 2021 to Apr 2022

12.9%

11.7%

14.7%

Last 3 months

Jan 2022 to Apr 2022

2.3%

2.5%

2.0%

Year to date

Dec 2021 to Apr 2022

11.6%

10.5%

13.1%

Age group as proportion of batch (Apr 2022)

100%

59%

41%

 

Region

Price Index Last Year
(Apr21 - Apr22)

Wales

11.9%

West Midlands

8.0%

South West

7.4%

South East

7.3%

East Midlands

7.0%

London

6.3%

Eastern

6.1%

North East

5.6%

North West

5.5%

Scotland

5.2%

Yorkshire and The Humber

4.5%

 

 


Insight that will enable you to optimise your pricing strategy 

Download our Home Insurance Price Index to gain insight into market movements, benchmark the major van insurance brands and help you understand the data behind the results.

 

Home Insurance Price Index


 

 

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