Home insurance premiums in the UK have been falling at an unprecedented rate. In fact, this year’s premiums were the lowest in the last five years. Homeowners who wanted home insurance this year parted with an average of £116 per year, which is quite low compared to an average of £160 charged for the same five years ago. We further estimate that the lowest premiums were charged in Norwich where residents parted with an average of just slightly over a hundred pounds per year while the highest rates were charged in Harrow, which had an average premium rate of £182 per year.
This report was further corroborated by the Association of British Insurers, which reported a decrease of seven percent in buildings only as well as contents only premiums in the second quarter of this year compared to last year. The combined building and content policy saw a decrease in cost by one point eight percent compared to the same period last year. This decrease resulted from factors such as a decrease in burglary and damage caused by floods. First, burglary rates decreased in Britain. Crime Survey for England and Wales, for example, reported a seven percent decrease in cases of crime that occurred in households and resident adults in the first quarter of this year in comparison with last year, the lowest rate ever reported by the agency. Secondly, a decrease in damage caused by this year’s winter flood has resulted in fewer flood-related claims by homeowners causing a decrease in home insurance premiums, this despite the washout weather witnessed in February this year across Britain and the recent flooding in December 2015.
However, the good tide is set to turn in the last quarter of this year and also in 2016 due to an increase of Insurance Premium Tax from six percent to nine point five percent. This increase took effect on the first of November this year. The Association of British Insurers estimates that as a result, there will be an increase of ten pounds added to the combined building and contents policy soon. Four point seven million households are set to be affected as a result. Under privileged households may have to forego other luxuries to be able to afford insurance or switch to cheaper products. For example, one may be forced to take up only a commodity cover or only a building cover as opposed to a combined cover. It will be interesting to see how the dynamics play out for insurance companies and homeowners in the last quarter as well as in 2016. Please speak to us here at City Insurance about your policy when renewing so that we can do our best to get you the best cover for the lowest premium and dodge the imminent rise.