But 2013 premium increases likely to be below inflation
The household market will make an underwriting profit in 2012, according to Deloitte.
Last year, insurers made an underwriting profit of 11p for every £1 of household premium earnt, and Deloitte said it expected similar results this year.
However, the accountancy firm said that increases in the average cost of household insurance premiums are unlikely to be above inflation in 2013.
Deloitte insurance partner James Rakow said: “Deloitte’s analysis shows that although 2012 has been a bad year for flood claims this has been offset by the fact that claims for other perils such as theft, subsidence, fires and accidental damage have been lower than previous years.
“Two thousand and twelve looks likely to be the fifth year in a row that the home insurance industry will be profitable and this makes it less likely that we will see above inflation premium increases in 2013.”
Rakow added that the hold-up in talks between insurers and the government to find a replacement to the statement of principles on flood insurance was the “biggest concern” for household insurers.
He said: “If an agreement on flood insurance is not reached, people in high-risk areas may find it much more difficult to find affordable flood cover.
“With uncertainty around the provision of flood cover for householders, now is the time for insurers to consider whether their flood risk data and models are detailed and accurate enough to make effective pricing and underwriting decisions for individual properties.”
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