Getting a rise out of household

It’s hardly surprising one of the big players has stepped out and decided to push up household rates, following years of weather-related claims. The big question is whether the rest of the market, or at least some of the key players, will follow.

If the motor market is anything to go by, any universal raising of rates is unlikely. Instead, it’s likely to be a slow creep as insurers realise they cannot afford to carry losses.

A lot will depend on what Aviva does. This week Aviva said it had suffered £100m of weather-related claims in Ireland and the UK. A large part of those claims will be for household. The fourth quarter update also says it’s a priority that the insurer chases top line growth. Although this is mainly on the commercial side, you can be sure Aviva will not want to lose ground on personal lines. Will it have the courage of inclination to raise household?

What makes rate rises even more pressing, for the market as a whole, is the fact insurers cannot rely on investments or reserves releases. The pot is dry for many insurers and on the investment side, while interest rates are low and for those with stock market portfolios, it is a period of recovery rather than return to form.

So the picture is clear: rates need to rise in household, but it’s a question of when not if.