Home insurance price rises have slowed with increased competition limiting annual price rises to just 1.6% taking average costs to £119, new analysis1 from insurance market research experts Consumer Intelligence shows.
Consumer Intelligence’s data - which is used by the Government’s Office of National Statistics to calculate official inflation statistics — shows premiums were virtually unchanged in the past three months.
Its quarterly Home Insurance Cost Index shows prices were still nearly 10% lower in July compared with February 2014, when the index started, despite concerns the Insurance Premium Tax increase in November last year would send costs soaring.
Instead relatively low claims for storm and flood damage and increased competition for business has kept prices flat. Prices in the past three months have fallen on average by 0.2% and are unchanged since December 2015.
Insurers have also not passed on the cost of the £180m industry levy on the Flood Re scheme to lower premiums for the 350,000 households in flood risk areas.
Homeowners aged 50 and over have seen average increases of 2.1% in the year to July taking best-buy premiums to £111 while the under-50s have seen annual increases of 1% taking average costs to £126.
Consumer Intelligence’s research monitors the five most competitive home policies across price comparison websites and direct insurers highlighting the need for homeowners to review their premium at their next renewal.
Phil Paterson-Fox, Consumer Intelligence Key Account Director, said:
“Storm and flood damage costs have proved to be less expensive for insurers than feared and were already provided for.
“Competition for business remains intense and the impact from last year’s Insurance Premium Tax rise has proved short-lived so customers are benefiting in contrast to premium rises across other sectors.
“Shopping around for home insurance and haggling with your existing insurer remains important to ensure your premium remains as competitive as possible as insurers are keen for business.”
Consumer Intelligence’s index shows best-buy premiums for under-50s are 10.6% lower than 2 years’ ago, February 2014, and 8.7% lower for the over-50s.
Notes
Notes to Editors
1The cheapest premiums were calculated by comparing the prices offered for 2,100 people by all the major Price Comparison Sites and key direct insurers. The top 5 prices for each person were compared to the previous month’s top 5, then these variations averaged to produce the index.