UK general insurers therefore have a key role to play in preventing the decline of household penetration rates

Young adults are increasingly being forced to rent for longer due to the current economic climate, making it vital for insurers to find new ways to reach tenants struggling to afford cover, according to data and analytics firm, GlobalData.

Purchasing a house or flat for the first time is a leading trigger for investing in home insurance, however, the age at which consumers are looking to do this – between their 20’s and 30’s – is increasing.

According to the firm’s 2021 UK Insurance Consumer Survey, published 8 March 2022, exactly 88.2% of homeowners had a form of household insurance last year, compared to just 48.4% of renters.

Furthermore, only 6.3% of tenants intended to stop renting within the next 12 months, with most respondents expecting to live in a rented property for at least two or more years.

Economic climate

Contributing to young people’s financial pressures and increased time renting are soaring house prices following the Covid-19 pandemic, as well as high inflation, slow wage growth and “recurrent job insecurity across certain sectors”, said GlobalData senior insurance analyst, Ben Carey-Evans.

He added that insurers can offer renters’ insurance, but policies must be cheap, flexible and digital to succeed.

“While such policies may be cheap and not especially profitable, they will help bring younger people into insurance and prevent the household penetration rate from gradually declining as more and more young people continue to rent,” he said.

Exactly 4,000 respondents took part in the survey, which was conducted during Q4 2021.