The Association of British Insurers (ABI) recently shared some eye-opening statistics on home insurance for the second quarter of 2023. Here's a breakdown of what you need to know:
Payouts are on the Rise: Home insurance claims saw an 11% increase in Q2, with a staggering total of £782 million paid out. That's an average of £8.6 million every day!
The Importance of Home Insurance: Mervyn Skeet, ABI’s director of general insurance policy, emphasised the critical role of home insurance. For many, their home isn't just a shelter but also their most significant asset. Without insurance, this valuable asset could be jeopardised.
Why the Increase? A significant factor behind the surge was the rise in subsidence claims, which came after a record-breaking heatwave. These claims alone jumped by 21%, reaching £54 million, up from £45 million in the same period last year.
Claim Values Jump: The average claim value was £4,300, marking a 24% increase from the previous year.
Premiums Also Increase, but at a Slower Rate: The average home insurance premium rose to £329, a 10% hike from £299 in Q2 2022. Despite the rising costs of claims, insurers are striving to provide competitive rates to UK households.
More Payouts than Premiums: A concerning trend for insurers is that they're paying out more than they're receiving. For every £1 in home insurance premiums, insurers paid out £1.22 in claims and expenses.
Future Prices Uncertain: ABI highlighted that they can't predict future insurance prices. Individual insurers will determine their pricing strategies.
The data underscores the importance of home insurance and the challenges insurers face in balancing premiums with claim payouts.