Buildings policy premiums appear to have taken a sharp turn in an upwards trajectory during the first quarter of this year, at least that’s what the AA’s benchmark British Insurance Premium Index is depicting. Based on the index’s ‘Shoparound’ premium (derived from a cross-section of the 5 cheapest quotes for would-be policyholders in what the AA refer to as a ‘basket of risks’), the average premium has risen by 5.4% for the 3-month period ending 31st March 2016; and officially stands at the sum of £114.52.
Glancing at the bigger picture – and taking into account buildings premiums here I the UK over the past 12 months – and the total percentage increase is confirmed at 12.3% according to the AA’s precise indexing system, with the largest single quarter rise being acknowledged as the last period of 2015.
The increase for the final 3-month period of last year – which represented 6.7% – was blamed on the much-publicized knock-on effect of last November’s Insurance Premium Tax rate hike, as instrumented by the Treasury and which came into force as of the beginning of that particular month. Meanwhile content cover was also noted by the AA’s British Insurance Premium Index as showing a quarter-on-quarter increase, observed as being up 0.7% (£60.47 on average), yet conversely down by 1.2% on 12 months previously.
Elsewhere www.insuranceage.co.uk report that the insurance industry-respected index flagged up a 3.6% increase for combined buildings and content policies, a rise of 2.8% on the previous 12 months and now meaning that average premiums quoted are in the region of £157.51.
Seasonally Adjusted Creative Accounting Could Yet Scupper UK Motorists’ Dreams of Lower Car Insurance Premiums Though, According to Experts
The AA’s Insurance Director, Michael Lloyd – summarising the accumulative findings arrived at by his employer – believes that the aforementioned IPT rate hike has effectively contributed to reverse a trend that until late had been dropping over the previous 5 years; with Lloyd outlining both ‘competitive pressure’ (within the home insurance marketplace) and ‘lower than expected severe weather claims’ being key influences to hitherto falling prices.
However – and as Lloyd himself takes up the story – he went on to describe how the present scene is forecast to change for the better again as we go forward, explaining his thoughts on this by adding; “On 1 April, Flood Re, the Government-backed insurance scheme designed to help flood-prone home owners obtain affordable home insurance, was launched. This is funded by the insurance industry which inevitably will have an effect on premiums across the market. Many families will, as a result, find big reductions in the cost of their cover which is great news.”
Moving on to address the subject of motor insurance premiums, the AA’s index pointed to statistical evidence that supported claims that cover quotes were beginning to be reined in once more, on the back of well-documented increases during 2015.
Again, the reasons as to why premiums rose last year (by more than 20%) seemed to have more to do with the IPT rate rise, along with the perpetual scourge of the motor insurance sector, that being the whiplash claim culture which many believe is tantamount to epidemic proportions; although is set to be pegged back later this year as an (albeit controversial) major overhaul of the small claims sector is rolled out by the government. The first quarter of 2016 saw annual car cover quotes diminish to an average £561.24, down from the previous quarter recording of £563.67; yet looking at the 12 month picture and it’s a recorded 20.7% increase overall.
The AA don’t want anyone to get too carried away with this news though, and are of the opinion that the first quarter of any new year tends to see motor insurers proffering more competitive pricing structures so as to ‘build a market share at a time when (with the new motor registrations) more policies are sold’. Lloyd told Insurance Age that; “Despite the small reduction this quarter, these figures suggest that insurers are becoming less willing to offer large introductory discounts to new customers.”