The average cost of home insurance rose by 31% from January to March 2024 compared to the first quarter of last year, according to Which and Compare the Market. At Munro-Greenhalgh we have also seen some big increases which are expected to continue throughout the year.

The main reasons for the increases in premium are: –

1. Increased Natural Disasters & Climate Change: The frequency and severity of natural disasters such as storms, floods, have been rising – some will argue that this is a consequence of climate change. In other countries hurricanes and wildfires have also had a massive impact in the new global economy. This results in higher claim pay outs for insurers, who then raise premiums to offset these costs. Insurers are adjusting their risk models to account for more unpredictable and severe weather patterns, leading to higher premiums to cover the anticipated increase in claims. Last autumn saw storms Babet, Ciaran and Debi batter the UK and led to weather-related damage claims reaching £573m. This is the highest on record and 36% greater than was paid out in 2022. Since January 2024 the UK has also had three further significant storms which have impacted the UK considerably resulting in more claims on home insurance. In the UK, flooding is one of the major climate risks. Approximately 6.1 million people across the country live in flood-prone areas – a number expected to increase by 61% by 2050 under a modest global warming scenarios of 2°C (UK Health Security Agency, 2023).
2. Inflation: General economic inflation has affected the cost of construction materials, labour, and other expenses related to repairing or rebuilding homes. Over the past few years the cost to repair or replace standard items such as televisions, tablets and lighting has increased. This is due to rising energy costs, inflation, labour shortages, cost of labour, additional costs to import parts and materials and problems with the global supply chain, resulting in more expensive insurance premiums. Figures from the Association of British Insurers (ABI) revealed the value of claims being paid out by insurers, jumped by nearly 10% to £2.55bn in 2023. As these costs rise, insurance companies need to increase premiums to ensure they can cover the higher expense of claims.
3. Reinsurance Costs: Reinsurance, which is insurance for insurance companies, has become more expensive. Reinsurers are raising their rates due to the same factors of increased risk and higher claims, and primary insurers pass these costs onto policyholders.
4. Higher Home Values: The housing market has seen significant increases in home values. Higher home values mean higher replacement costs, which in turn lead to higher insurance premiums to ensure adequate cover.
5. Rising Claim Frequency and Severity: Beyond natural disasters, other factors like increased litigation, higher medical costs, and more frequent incidents (e.g., water damage, theft) contribute to a rise in the number and severity of claims.

These and other factors are collectively contributing to the rising cost of home insurance premiums in 2024.

Insurers continuously adjust their pricing models to reflect current and projected risks, ensuring they can cover claims and remain financially viable. However, for some Insurers they have had enough and have decided withdraw from the market including established brands such as Zurich, Royal & Sun Alliance, More Than and Home & Legacy. This in itself also causes problems as the remaining Insurers become inundated with enquiries and therefore selective with the risks they are willing to write.

At Munro-Greenhalgh Ltd we will work closely with you to understand your individual needs and our Insurer Partners to ensure we offer the the correct policy to cover your home and your possessions at the best terms available.

For any help or assistance please contact the office.