Home outperforms motor again
Average home insurance premium prices creeped upwards in Q3 2012, according to research from the AA Insurance.
The research found that the cost of both buildings and contents insurance rose by 0.2% to £176 and 0.5% to £90, respectively. The average quote for a combined buildings and contents policy fell by 0.6% to £230.
The AA said, however, that the market average of all home quotes pointed to an underlying upward trend. For buildings cover, the AA found a 1.7% increase to £232; for contents, 1.4% to £117; and for a combined policy, 1.3% to £304.
AA Insurance director Simon Douglas said that flooding during 2012 has yet to be reflected in premiums.
He said: “The year ended with widespread floods and there are diverse views in the market on how much effect they will have on premiums.
“Home insurance has certainly performed better than the car insurance sector. And, while the number and severity of weather-related claims has been increasing, events during 2012 have not been on the scale of the 2007 floods.”
He said that a replacement to the Statement of Principles on the provision of flood insurance would not increase premiums more than about £8 per policy, due to the competitiveness of the market.
Douglas added that some insurers had told him that they needed to increase rates to build reserves.
“As recent severe weather claims come in, coupled with the January snowfalls, I believe premiums are likely to rise in the early part of the year,” he said.
The AA boss said he also wanted the government and local authorities to take action to prevent new building that doesn’t also properly plan for water run-off, as this could otherwise increase flood risk to homes and businesses.
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