Figures from the Association of British Insurers (ABI) show that insurers paid out £1.3bn in claims during the third quarter of this year to help homeowners and businesses cope with unexpected and unwanted events like fire and flooding.
This followed a costly second quarter for insurers, with claim payouts of £1.4bn, bringing the year-to-date total to £4.1bn.
Claims for the first three quarters of the year were also more than £500m (15%) higher compared to the same period in 2023.
Bad weather playing a part
The ABI said adverse weather continues to play a significant role in the amount insurers pay out in home insurance claims.
Claims for damage to homes from storms, heavy rain and frozen pipes reached £136m in the third quarter of this year. This is the sixth consecutive quarter in which weather-related claims have been above £100m. The figure is also 6% higher than the £128m paid out in Q3 2023.
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The average payout per home insurance claim rose 13% on Q2 2024 to £6,002 – a record high. It is also 33% (£1,506) higher compared to the same period in 2023.
Claims for weather damage to businesses remained high at £90m – an increase of 4.5% on the previous quarter, and up 28% on the same quarter last year.
Subsidence payouts for home insurance claims were also up at £66m – rising 11% on the £59m paid in Q2 2024, and 61% on Q3 2023.
Impact on premiums
The impact of high claims is reflected in the price of insurance premiums. The ABI calculated that the average price of combined buildings and contents home insurance went up by 3% in the third quarter of the year.
The average price of a combined buildings and contents policy for a household in Q3 2024 stood at £407. This was £11 (3%) higher than the previous quarter and £56 (16%) higher than the same period last year.
The average buildings-only policy was £329, an increase of £9 (3%) on the previous quarter, and up £57 (21%) on Q3 2023.
For contents-only cover, the average price paid was £138 – stable versus Q2 2024 but £11 (9%) higher than Q3 2023.
Louise Clark, policy adviser at the ABI, said: “Insurers continue to be at the forefront of climate change, supporting communities impacted by extreme weather to recover as quickly as possible. We know premiums are putting pressure on household budgets and, as an industry, we’re determined to play our part in tackling the cost pressures behind them.
“However, the industry cannot do this alone. The Government must take action too, and more investment in flood defence and maintenance is urgently needed. We also need to see swift action on surface water flooding, and an immediate end to building on land that is at a high risk of flooding. Flood prevention and resilience measures must be considered in all planning decisions and building standards – to make sure all new buildings are climate-resilient.”
