• Home insurance premium increases likely to slow in 2013;
• Failure to agree flood insurance agreement with Government is household insurers’ biggest fear.
Research from Deloitte, the business advisory firm, indicates that the household insurance market is on course to make an underwriting profit in 2012.
Insurers made an underwriting profit in 2011 of 11p for every £1 of premium earned, and similar levels of profit are expected for 2012. Based on research for Deloitte’s annual household insurance seminar, increases in the average cost of household insurance premiums are unlikely to be above inflation in 2013.
James Rakow, insurance partner at Deloitte, said:
“Deloitte’s analysis shows that although 2012 has been a bad year for flood claims this has been offset by the fact that claims for other perils such as theft, subsidence, fires and accidental damage have been lower than previous years.
“2012 looks likely to be the fifth year in a row that the home insurance industry will be profitable and this makes it less likely that we will see above inflation premium increases in 2013.
“Currently the biggest concern for household insurers is the fact that the government and insurance industry have not yet reached agreement on a mechanism for providing affordable flood insurance for high-risk households. If an agreement on flood insurance is not reached, people in high-risk areas may find it much more difficult to find affordable flood cover.
“With uncertainty around the provision of flood cover for householders, now is the time for insurers to consider whether their flood risk data and models are detailed and accurate enough to make effective pricing and underwriting decisions for individual properties.”
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