Today’s News
The average U.K. home insurance policy has surged by nearly one-fifth to just under GBP 400 (USD 510), marking an all-time high, as insurers raise their prices following a record year of weather-related claims.
Image Source: ABI
According to data released by the Association of British Insurers (ABI) on Monday, the average cost of annual buildings and contents insurance policies rose to GBP 396 (USD 505) between May and June, a 6% increase from the previous quarter and a 19% jump compared to the same period last year.
This data highlights the increasing financial pressure on consumers, as the home insurance sector grapples with its toughest underwriting conditions in decades. A combination of inflation in rebuild costs and more severe weather linked to climate change has driven up insurance payouts.
In the second quarter of this year, insurers paid out a record GBP 1.4 billion (USD 1.7 billion) in claims to U.K. homeowners and businesses, the highest quarterly total since the ABI began collecting data in 2017. Last year, the total payout for weather-related damage reached a record GBP 573 million (USD 731 million), largely due to a series of storms.
Louise Clark, a policy adviser at the ABI, emphasized the “devastating impact” that adverse weather can have, based on the latest claims figures. She also reiterated the industry’s call for government action, particularly in addressing surface water flooding and maintaining flood investments, to help mitigate future risks.
For the fifth consecutive quarter, weather-related claims—covering damage from storms, heavy rain, and frozen pipes—exceeded GBP 100 million (USD 127 million), while subsidence payouts also reached a quarterly record. Although the GBP 396 figure represents a nominal all-time high, the ABI noted that, when adjusted for inflation, it remains below levels seen in 2017.
The rising cost of home insurance comes amid what consumer groups have termed a “crisis” in car insurance, another essential financial product. While car insurance premiums have started to ease from historically high levels, Labour has pledged to address the “soaring cost of car insurance” in its general election manifesto.
Paul De’Ath, head of market intelligence at consultancy Oxbow Partners, explained that home insurance premiums have been slower to rise in response to increasing claims compared to motor insurance. He noted that some firms initially focused on fixing issues in their larger motor underwriting operations, but the market is now beginning to adjust prices to account for the rising home insurance claims.
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