Data and analytics firm predicts that gross written premiums within the UK home insurance market will drop to £5,935 in four years’ time
Data and analytics company GlobalData has forecast that the UK’s home insurance market will contract as a result of the Covid-19 pandemic, leading to a compound annual growth rate drop of 1.4% over the next four years.
The firm predicts that gross written premiums will fall to £5,935 by 2024, compared to £6,369 in 2019.
Jazmin Chong, insurance analyst at GlobalData, attributed this decline in GWP to consumers taking out fewer policies, choosing less expensive cover options - such as combined policies - or reducing the extent of optional extras in their coverage.
Chong said: “In the long-term, lockdown will have greater implications for the household industry, as customer behaviour and [the] willingness to adapt technologies to their home insurance policies will change.
“This will make insurers less willing to further invest and integrate home sensor technologies or other technologies as part of their policies. This will make it harder for the home insurance industry to avoid paying out expensive claims and also trickier for insurers to reduce premiums.”
Chong continued that GlobalData’s 2019 UK Insurance Consumer Survey found that the number of customers shopping around before renewing their home insurance policy has increased to 42%, while 28% of policyholders will switch provider during the renewal time.
She said: “The increased proportion of consumers changing their purchasing behaviour is due to an increased cost of premiums, a common trend over the last few years.
“These changes in the market, combined with a greater number of budget-conscious consumers being in a better position to mitigate household risk while working from home, will lead to a decrease in the uptake of household insurance.”