New figures published by the Association of British Insurers (ABI) indicate that the average price paid for home insurance in the first quarter of 2023 was £315, up by six per cent on the same quarter last year. The average price paid for cover in the first quarter of 2022 was £298.
Despite surges in weather-related claims and more expensive building materials, the average price of combined home buildings and contents insurance has increased by less than the rate of inflation over the past year, the ABI's insurance premium tracker said. During 2022, home insurers paid out £2.5 billion to help customers cope with unexpected events, such as storm damage.
The tracker looks at the prices that customers pay for their cover, rather than the prices they are quoted. At £315, the average combined buildings and contents policy was up by £10, or three per cent, compared with the previous quarter.
According to recently-released Office for National Statistics (ONS) inflation figures, the Consumer Prices Index (CPI) rose by 10.1 per cent in the 12 months to March 2023, slowing from 10.4 per cent in February.
Financial Conduct Authority (FCA) rules on the pricing of home and motor insurance introduced on January 1, 2022 ensure that the price paid by renewing customers for motor and home insurance is no greater than the price charged to an equivalent new customer for the equivalent policy bought through the same distribution channel, such as insurer, broker, or price comparison website.
The rules do not set or cap the level of premium paid by new or existing customers. The price of cover will continue to reflect a range of factors, including the cost of settling claims, the ABI said.
Laura Hughes, the ABI's manager, general insurance, said: "Insurers appreciate these continue to be tough times for many households coping with the rising cost of living.
"The rise in the average combined buildings and contents premium over the last year remains under the inflation rate, despite the above inflation rises in the cost of many building materials."
Ms Hughes added: "Last year's storms and the surge in subsidence claims following the summer heatwave were a dramatic reminder of the importance of home insurance. During these challenging times, anyone worried about being able to continue paying their home insurance should speak to their insurer about any alternative payment options that may be available."
Research released by the FCA this week indicated that some people have cancelled or reduced their insurance generally, to cope with the immediate pressures of rising living costs.
But this could potentially leave them worse off or in difficulty if something goes wrong.
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