In a year that saw turbulent weather, including storms and heat waves, the average price paid for home insurance in the UK fell to its lowest since the Association of British Insurers (ABI) began collecting data in 2012. According to the ABI’s latest Household Insurance Premium Tracker, the average price paid for combined buildings and contents home insurance was £300 in 2022, down 6% from the previous year. The average price paid for separate buildings and contents policies were also at all-time lows, at £228 and £116, respectively.
The ABI’s Tracker is unique in that it looks at the actual price consumers pay for their cover, rather than just the price they are quoted. The drop in premiums was attributed to a highly competitive market, as insurers competed to offer the best deals to consumers.
However, despite the record low prices, the cost of home insurance in the UK could be on the rise in 2023. A surge in subsidence claims, a rise in frozen pipe pay-outs, and the increasing costs of building materials and labour could all contribute to higher premiums. The full costs of subsidence claims resulting from the heat waves of 2022 are expected to materialize this year, while the cold snap in December 2022 led to a surge in claims for damage caused by burst pipes. The impact of these factors, along with the new rules on pricing introduced by the Financial Conduct Authority (FCA), could put pressure on insurers to raise premiums.
The FCA rules, which came into effect in January 2022, require insurers to charge renewing customers the same price as new customers for equivalent policies bought through the same distribution channels. While this has led to a 10% drop in average prices for renewals, the prices for new customers could remain high due to other factors such as the cost of settling claims.
Laura Hughes, the ABI’s Manager for General Insurance, said, “Insurers appreciate that these continue to be tough times for many households coping with the rising cost of living. Anyone concerned about being able to continue paying their home insurance premium should speak to their insurer about any alternative payment options that may be available.”
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In conclusion, while 2022 saw the cheapest home insurance prices in the UK since the ABI began collecting data, rising subsidence claims, frozen pipe pay-outs, and increasing costs of building materials and labour could all contribute to higher premiums in 2023. UK homeowners should review their insurance coverage and take advantage of the competitive market to find the best deals. Just Quote Me offers an easy way to get a quote for home insurance in just one click, making it a great option for anyone looking for coverage.