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Storm Desmond ‘will not mean widespread home premium rises’

Joanna Faith
Written By:
Joanna Faith

Flooding due to Storm Desmond in Cumbria is expected to cost £250m in home insurance claims, but may not lead to widespread premium rises despite previous predictions.

Claims would have to total £1bn in order to trigger across-the-board increases, AA Insurance said.

According to its British Insurance Premium Index, home insurance premiums have been falling steadily for four years. The insurer expects premiums during the fourth quarter of the year to again show a modest fall.

Mike Lloyd, director of AA Insurance, said that insurers have sufficient reserves to meet claims such as the recent flooding and although those affected will expect to suffer premium and/or excess increases, average premiums overall are not expected to be affected.

He said: “The home insurance market’s profitability is dependent on the frequency and effects of severe weather including floods, freezes, drought and subsidence. But home premiums also tend to be less volatile than motor and it would take widespread weather damage to trigger a rapid change in rates across the market.”

He added that though the insurer does not believe it will see significant pressure on premiums until and unless there is widespread severe weather, it does expect premiums to bottom during the first half of next year.