By Ryan Fowler
The Shoparound summary, an average of the cheapest five quotes for an annual home insurance policy in the Index basket of risks, shows that the cost of both buildings and contents insurance rose by 0.2% to £176 and 0.5% to £90 respectively. The average quote for a combined buildings and contents policy fell by 0.6% to £230.
However, the market average of all quotes for each ‘customer’ in the nationwide basket of risk points to an underlying upward trend.
For buildings cover this shows a 1.7% increase to £232; for contents 1.4% to £117; and for a combined policy 1.3% to £304.
Simon Douglas, director of AA Insurance, said that flooding during 2012, which is estimated to be costing the insurance industry around £1bn, has yet to be reflected in premiums.
“The year ended with widespread floods and there are diverse views in the market on how much effect they will have on premiums.”
He believes that rates need to increase, largely as a result of damaging weather because of climate change.
Mr Douglas said: “Some insurers are pointing to a need to build reserves further to meet potentially significant claims. Others believe that rates already take this into account.
“As recent severe weather claims come in, coupled with the January snowfalls, I believe premiums are likely to rise in the early part of the year.”
