A combination of the Covid-19 pandemic and an ongoing “pricing battle” on price comparison websites continue to cause a downward trend in home insurance premiums, yet elevated volatility is expected in the months ahead with insurers forced to apply new pricing rules, according to insurance analytics firm Consumer Intelligence.
It comes as it found a typical buildings and content policy now stands at £138, a reduction of 8.2% in the last 12 months. Overall, premiums have decreased by 6.9% since Consumer Intelligence first started collecting data in February 2014.
It found the under-50s homeowner (-8.9%) has taken the lion’s share of this saving, with the over-50s (-4.5%) benefiting slightly less from the long-term drop in prices.
Geographically, London (£193) continues to be the most costly place to buy household insurance with the latest figures indicating Londoners on average pay a third more than homeowners in the neighbouring South East (£145), the next most expensive region for home cover.
The North East (£123) remains the cheapest UK region, with the East Midlands (£128) and North West (£128) following not far behind.
In addition, it found across-the-board premium reductions continue in all regions. Double-digit yearly price falls were recorded in both Yorkshire and the Humber (-10.9%) and the South East (-10.2%). Whereas Wales (-3.9%) recorded the smallest declines over the last 12 months.
When looked at over a shorter three-month time frame, home insurance premiums were still falling across all UK regions – the biggest reductions recorded in Yorkshire and the Humber (-4.1%), the South East (-3.9%) and Scotland (-3.9%).
The study also found that only £16 separates the two main age groups when it comes to buying home cover. An under-50s homeowner typically pays £145 for an annual buildings and contents policy, whereas the over-50s pay on average £129 for a similar product.
The under-50s saw their home insurance costs reduce by 9% in the last 12 months, with prices for the over-50s falling 7.1% in the same period.
The cheapest homes to insure remain those built this century – with average premiums for properties built post-2000 standing at just £130.
Harriet Devonald, pricing expert at Consumer Intelligence, said: “More people have been staying at home for longer periods – with burglars deterred from breaking into houses and water damage claims down as people are on hand to respond quickly to leaks.
“What we’re also seeing in the home PCW market is something of a pricing battle, triggered by a few providers – with PCW-led distribution strategies – that have been really trying to grow their home book. And this has triggered reactions from some larger players trying to keep up and protect their ground.”
She added: “We expect new business premiums to go up as the market levels out new business and renewal pricing – however by how much, we have yet to see.
“These new rules are likely to impact home insurance far more harshly than motor, with home insurers having a lot of old and large back books. And some insurers will be affected more than others.”