Home insurance premiums edge up, remaining below historic highs: ABI

Home insurance premiums in the UK increased by 3% in the first quarter of 2024. Despite this uptick, prices remain below historic highs, according to data from the Association of British Insurers (ABI).

Home insurance premiums increased by 3% in the first quarter of 2024, attributed to severe winter weather. Despite this uptick, prices remain below historic highs, according to data from the Association of British Insurers (ABI).

The average combined buildings and contents premium rose to £375, with buildings-only cover up by 5% to £298, while contents-only cover remained unchanged at £132.

While the quarterly rise is slightly lower than the previous quarter (+4%), year-on-year premiums have surged by 19% from Q1 2023 to Q1 2024. Nevertheless, in real terms, prices are still below the peak witnessed in Q1 2016, when the average home policy cost £419.

The year 2023 saw significant weather-related home insurance claims, reaching a record £573 million, primarily due to storms Ciaran, Debi, and Babet. These storms, occurring in the final three months of the year, caused £352 million worth of damage to homes.

Louise Clark, ABI’s Policy Adviser, General Insurance, said: “The longer we put off vital investment in flood defences, the more that flood damage will ultimately cost the consumer.”

Flooding remains the most substantial contributor to weather-related damage, prompting the ABI to urge the government to allocate at least £1 billion annually for flood defence and maintenance to address the challenges posed by climate change.

However, public investment in flood defence work has fallen short of this target since 2021, exacerbating vulnerability to floods each passing year.

Clark further commented: “An increase of the tax on insurance policies – Insurance Premium Tax (IPT) – was earmarked by government in 2016 to fund flood defences. This tax brings in billions for HMRC yet flood defence investment lags behind.”

“There are other important steps we need to consider too, including reform of planning laws to prevent home building on high flood risk areas and a greater focus on climate-resilient properties.”

In other recent news, the ABI further reported the significant increase in weather-related home insurance claims in 2023, highlighting the pressing need for greater investment in flood defences.

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