A combination of the COVID-19 pandemic and an ongoing “pricing battle” on price comparison websites continue to cause a downward trend in home insurance premiums, according to insurance analytics expert Consumer Intelligence.
However, the firm warned of elevated volatility is expected in the months ahead with insurers forced to apply new pricing rules.
Harriet Devonald, pricing expert at Consumer Intelligence, said: “More people have been staying at home for longer periods – with burglars deterred from breaking into houses and water damage claims down as people are on hand to respond quickly to leaks.
“What we’re also seeing in the home PCW market is something of a pricing battle, triggered by a few providers – with PCW-led distribution strategies – that have been really trying to grow their home book. And this has triggered reactions from some larger players trying to keep up and protect their ground.”
A typical buildings and content policy now stands at £138, a reduction of 8.2% in the last 12 months.
“We expect new business premiums to go up as the market levels out new business and renewal pricing – however by how much, we have yet to see”, added Devonald.
“These new rules are likely to impact home insurance far more harshly than motor, with home insurers having a lot of old and large back books. And some insurers will be affected more than others.”
Long-term
Overall, premiums have decreased by 6.9% since Consumer Intelligence first started collecting data in February 2014.
The under-50s homeowner (-8.9%) has taken the lion’s share of this saving, with the over-50s (-4.5%) benefiting slightly less from the long-term drop in prices.
Into the regions
With some of the most expensive properties in Britain, it’s no surprise that London (£193) continues to be the most costly place to buy household insurance.
In fact, Londoners pay – on average – a third more than homeowners in the neighbouring South East (£145), the next most expensive region for home cover.
The North East (£123) remains the cheapest UK region, with the East Midlands (£128) and North West (£128) following not far behind.
Across-the-board premium reductions continue in all our regions. Double-digit yearly price falls were recorded in both Yorkshire and the Humber (-10.9%) and the South East (-10.2%). Whereas Wales (-3.9%) recorded the smallest declines over the last 12 months.
When looked at over a shorter three-month time frame, home insurance premiums were still falling across all UK regions – the biggest reductions recorded in Yorkshire and the Humber (-4.1%), the South East (-3.9%) and Scotland (-3.9%).
Age differences
Only £16 now separates our two age groups when it comes to buying home cover.
An under-50s homeowner typically pays £145 for an annual buildings and contents policy, whereas the over-50s pay on average £129 for a similar product.
The under-50s saw their home insurance costs reduce by 9% in the last 12 months, with prices for the over-50s falling 7.1% in the same period.
Property age
The cheapest homes to insure remain those built this century – with average premiums for properties built post-2000 standing at just £130.
Our oldest segment – Victorian-era properties built between 1850 and 1895 – continues to attract the highest yearly premiums of £179, which reflects the higher cost of claims made by their owners with older properties more likely to develop faults and replacement materials expensive to source.
Again, across-the-board premium reductions were seen in all our age segments – with homes built between 1970 and 1985 (-9.8%) and those erected from 1985 to 2000 (-9.0%) recording the biggest price falls over the last 12 months.
| REGION | CHANGE IN YEAR TO OCTOBER | AVERAGE PREMIUM (FIVE CHEAPEST) |
| Wales | -3.9% | £130 |
| East Midlands | -5.7% | £128 |
| South West | -7.4% | £135 |
| London | -7.8% | £193 |
| Scotland | -8.2% | £135 |
| West Midlands | -8.3% | £129 |
| Eastern | -8.6% | £133 |
| North West | -8.6% | £128 |
| North East | -9.0% | £123 |
| South East | -10.2% | £145 |
| Yorkshire and The Humber | -10.9% | £133 |
| Overall | -8.2% | £138 |
