Weather pushes up home insurance premiums

15 April 2008

Customers will be hit by above-inflation rises

The next six months will see insurers hitting existing customers with above-inflation price rises as they try to restock their money reserves after severe weather cost the insurance industry £1bn.

Gareth McChesney, of Allianz, one of the largest insurers in the UK, said: “Across the market we expect increases in household premiums of between 5 per cent and 7 per cent, as a result of claims inflation and the climatic nature of household insurance.”

According to experts in the fields prices will be kept low by insurers in bids to attract new customers but prices will rise above inflation for existing customers.

The cost of individual claims has been soaring resulting in premiums being increased, with insurers finding material and labour charges particularly costly.

According to the AA Insurance Premium Index, between January 2007 and January 2008, home insurance premiums increased by 3.3%.