General Insurance Article - Home insurance premiums rise but remain below historic peaks

 The data from the Association of British Insurers (ABI) – which is based on prices paid rather than quotes – shows the average home insurance (combined buildings & contents) premium rose to £375. Buildings-only cover rose 5% to £298 and contents-only cover remained static at £132.

 The 3% quarterly rise is slightly less than Q4 2023 (+4%), but year-on-year (Q1’23 to Q1’24) home insurance premiums have increased by 19%. However, in real terms, prices sit below peaks seen in Q1’2016 when the average home policy cost £419.

 2023 was a year marked by bad weather, with the worst weather-related home insurance claims on record at £573m. Most of this was caused by the succession of storms Babet, Ciaran and Debi, which struck in the final three months of last year and caused £352m of damage to homes.

 The largest element of weather-related damage is caused by flooding. The ABI has repeatedly called on the government to ensure that flood defence and maintenance receives at least £1bn a year to keep pace with climate change.

 However, since 2021 public investment in flood defence work has fallen short of this, meaning each year we fall further behind in our fight to resist floods.

 Louise Clark, ABI’s Policy Adviser, General Insurance, said: “The longer we put off vital investment in flood defences, the more that flood damage will ultimately cost the consumer.

 “An increase of the tax on insurance policies – Insurance Premium Tax (IPT) – was earmarked by government in 2016 to fund flood defences. This tax brings in billions for HMRC yet flood defence investment lags behind.

 “There are other important steps we need to consider too, including reform of planning laws to prevent home building on high flood risk areas and a greater focus on climate-resilient properties.”