Below inflation rise in the cost of home insurance despite turbulent weather and rising building material costs
The ABI Home Insurance Premium Tracker is the only survey that looks at the price consumers actually pay for their cover, rather than the prices they are quoted.
Average price paid for home insurance in the first quarter of the year was £315, up 6% on the same quarter last year.
Despite surges in weather related claims and more expensive building materials, the average price of combined home buildings and contents insurance rose by less than the rate of inflation over the last year, according to the ABI's Home Insurance Premium Tracker.
During 2022, home insurers paid out £2.5 billion to help customers cope with unexpected events, such as storm damage. This was up 6% on 2021.
According to the latest Tracker, in the first quarter of this year:
- The average premium paid for a combined buildings and contents policy was £315, up £10 (3%) on the previous quarter. This is a 6% rise over the last year from the first quarter, 2022.
- The average buildings only policy was £236, up 1% on the previous quarter. Over the last year, since the first quarter 2022, the average premium has risen 5%.
- For contents only cover, the average price paid at £117 fell slightly by less than 1% on the previous quarter. Over the last year, since quarter 1 2022, it has risen by 1%.
The Financial Conduct Authority rules on the pricing of home and motor home insurance introduced on 1 January 2022 ensure that the price paid by renewing customers for motor and home insurance is no greater than the price charged to an equivalent new customer for the equivalent policy bought through the same distribution channel, such as insurer, broker, or price comparison website. However, the rules do not set or cap the level of premium paid by new or existing customers. The price of cover will continue to reflect a range of factors, including the cost of settling claims.
2022 – a year of turbulent weather
- Storms Dudley, Eunice, and Franklin in February led to insurers dealing with 170,000 claims for property damage, paying out £473 million to support affected customers.
- Following last summer’s record-breaking temperatures, insurers expect to pay £219 million in subsidence claims made in 2022. This is the highest expected insurance subsidence bill since 2006.
- The cold snap last December led to a surge in claims for damage caused by burst frozen pipes, as reported by several insurers.
Higher costs of building materials impact on repairing damaged homes
Construction costs rose by 15% in 2022 over the previous year (ONS construction building materials). Reasons for this rise include the war in Ukraine, leading to a surge in energy prices, and the continued fallout from the Covid pandemic with a shortage of raw materials resulting from factory closures during the lockdowns.
Insurers appreciate these continue to be tough times for many households coping with the rising cost of living. The rise in the average combined buildings and contents premium over the last year remains under the inflation rate, despite the above inflation rises in the cost of many building materials.
“Last year’s storms and the surge in subsidence claims following the summer heatwave were a dramatic reminder of the importance of home insurance. During these challenging times, anyone worried about being able to continue paying their home insurance should speak to their insurer about any alternative payment options that may be available.”
Laura Hughes
ABI’s Manager, General Insurance
For more information please contact ABI Press Office.