Competitive market keeping home insurance bills low

3 September 2019   By Dr Lucy Brown, Editor

Latest figures from Consumer Intelligence show average price rises of 2.1% in the last year.

This means the average home insurance policy for combined buildings and contents insurance stands at £136 per year.

It keeps home insurance price increases roughly in line with the headline inflation rate in the UK which was 2% in July 2019.

Unsurprisingly, Londoners are paying more for their home insurance with an average of £187 per annual policy.

home insurance

Prices rising steadily

Although customers probably won't welcome a 2.1% average rise in any bill, it still forms part of a longer downward trend according to Consumer Intelligence, a data analytics company.

They suggest average premiums have fallen by 1% since they first began collecting data back in February 2014.

Their methodology works by comparing quotes through major price comparison websites and notable direct insurers to gather the top five quotes for 2,100 people.

So, while not a widespread analysis, it's calculated to represent different areas of the UK and different age groups to get the most balanced data possible.

Regional disparity

Of all the regions in the UK, only London and the South East demonstrated premiums over the Great Britain average of £136 per year.

London was by far the area with the highest premiums, offering an average of £187 and increasing the average for the whole country.

Customers in the South East were the only other area above the national average at £140, while all other regions sat below the average.

Those looking to insure their homes in the North East get the cheapest average at £119 per year, while householders in Wales are the only ones to see their average premiums drop by 0.3% from one year to the next.

There are also age disparities as well as regional ones with premiums increasing by 2.7% for the over-50s meaning an average policy for that group cost £143 per year.

For the under-50s, the increase was only 1.5% on average which translates as £129 per year.

Home insurance competition

All areas of financial service in the UK are consistently under review and the home insurance market has not avoided this.

For example, a key element of the Financial Conduct Authority's (FCA) strategy in recent years has been to tackle unfair pricing models, including so-called 'personal pricing' within the home and car insurance industries.

They recognise that technological advances offer more data to insurers to make more complex decisions than ever before, but it can also discriminate against some customers.

After opening a consultation in late 2018, they received 51 responses and are now working to embed their ideas into regulatory mechanisms.

For customers looking to find insurance immediately, these future reforms won't help, but it's interesting to note the regulator is addressing these concerns about personal pricing.

Most people who have signed up to an insurance policy have seen premiums skyrocket following an introductory offer.

Back in 2017, Aviva became one of the first insurance companies to reward customer loyalty, and steps have been taken industry-wide to further embed this in the culture of insurance companies.

Nevertheless, customers should always proactively search for better deals when renewal time comes around, whether it's for home, car or other types of insurance. Even if you receive a letter stating your premiums are going down, get into the habit of checking other insurers too.

Choose offers a free comparison search tool that gathers information from hundreds of insurance companies in one place. Search here, completely free of charge.

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