Home Insurance Premiums Rise due to Adverse Weather and Inflated Repair Costs

February 15, 2024

According to the latest ABI Household Premium Tracker, after multiple storms hit the UK, the average house insurance premium rose by 4% in the last quarter of 2023 and with recent widespread flooding across the UK, it is thought that premiums could rise again.  

The final quarter saw multiple storms hit the UK causing widespread damage to properties, with £352 million paid out to those whose homes were damaged during Storm Babet, Ciaran and Debi alone. ABI data shows that insurers could pay out up to £560 million to those whose properties, vehicles or businesses were damaged by the storms.  

As insurers continue to battle weather damage and inflated rebuilding costs, the widespread flooding across the UK last week could drive the price of home insurance up further.  

ABI’s Tracker reveals that between 1st October and 31st December:    

• The average premium paid for a combined buildings and contents policy was £364, an increase of £14 (4%) on the previous quarter. At the end of Q4 2023, the premium average climbed by 19%. Across the whole of 2023, the average premium rose by 13% to £341.  
• The average buildings only policy was £284, up by £12 (4%) on the previous quarter. Over last year, the average premium had increased by 15% to £262.  
• The average price paid for contents only cover at £131 rose by £5 (4%) on the previous quarter. The average premium rose 7% to £124 over the last year.  

With adverse weather on the rise due to climate change, premiums may increase as insurers account for a growing number of claims, margins affected by last quarters’ storm activity and inflated rebuilding and repair costs. 

Nonetheless, home insurance prices have remained competitive. When adjusted to account for inflation, the average price of cover has fallen between 2014 – 2023. The average cost of claims rose by 6% in real terms between 2017 – 2022.   

Action for firms 

With concerns that premiums will rise again following the flooding across the UK last week, insurers and intermediaries must consider what can be done to ensure that they are continuing to provide policies which support customer needs, represent fair value and deliver good outcomes, whilst mitigating the increasing pressure of rising costs and demands.  

In response to the flooding, ABI has called for more to be done to “support communities up and down the country to be more resilient” to extreme weather. General Insurance Policy Manager, Laura Hughes suggested that the government should “guarantee that flood prevention and resilience measures are considered in all planning decisions and building standards” and “adequately [fund] flood defence investment and maintenance”. 

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