‘Only way is up’ for home insurance premiums
Analysis by market research firm Consumer Intelligence found average home insurance premiums have risen by 3.1% to £119 since insurance premium tax (IPT) hikes came into force in November.
The IPT rise, announced by Chancellor George Osborne last year, affects insurance firms but Consumer Intelligence’s analysis – which is used by the Government’s Office of National Statistics to calculate official inflation statistics – found the tax rise is being passed directly to homeowners reversing years of falling premiums.
Recent storm and flood damage, which could exceed £1.5bn according to the analysis, is also putting pressure on home insurance costs.
Consumer Intelligence’s research monitors the five most competitive home policies across price comparison websites and direct insurers.
It found homeowners aged 50-plus are paying slightly less on average than younger customers – average premiums for over-50s are £110 compared with £127 for the under-50s.
But price rises are relatively similar in the past three months – for the over-50s premiums are up 2.9% compared with 3.3% for the under-50s.
Home insurance customers can take some comfort. Average premiums are still slightly below the rate of a year ago but only by 0.8%. However they are 9.5% lower than in 2014.
Ian Hughes, chief executive of Consumer Intelligence, said: “Unfortunately the only way is up now for home premiums following years of price cuts driven by a big reduction in burglaries and fewer claims for flood and storm damage thanks to recent milder weather.
“The rise in insurance premium tax has reversed the trend dramatically with a sharp rise in the past three months. The recent series of storms and floods with claims of up to £1.5bn expected will add to the pressure.
“That makes shopping around for home insurance and haggling with your existing insurer even more important to ensure your premium remains as competitive as possible.”
The increase in insurance premium tax from 6% to 9.5% took effect in November and will boost premiums for home, motor, breakdown, buildings, pet, private medical and mobile insurance.