Home insurance premiums remain stable despite flood fears and tax increases

 
Oliver Gill
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Major Incident Declared As Storm Desmond Wreaks Havoc In Cumbria
Britain was battered by three major storms last winter (Source: Getty)

Insurance premiums have not spiked as was feared following the flooding that blighted parts of Britain earlier this year.

The latest research shows that annual premiums have increased just 1.6 per cent for the year to July. Furthermore, these price changes include the increase in insurance premium tax in November 2015 from six to 9.5 per cent.

In addition there was the £180m Flood Re levy on insurance firms announced in George Osborne's final Budget. It was feared by consumers that it would be passed on to them directly and increase their annual premiums.

Read more: Your quick guide to Flood Re

However, additional costs have not been passed on for two reasons, according to Consumer Intelligence, who compiled the data.

"Storm and flood damage costs have proved to be less expensive for insurers than feared and were already provided for," said Phil Paterson-Fox of Consumer Intelligence.

“And competition for business remains intense and the impact from last year’s insurance premium tax rise has proved short-lived so customers are benefiting in contrast to premium rises across other sectors"

The news of static price movements is line with information released by the Association of British Insurers (ABI) and the AA.

Referencing prices changes for the year to June, the ABI said that prices had not increased because the industry had factored in once-in-a-lifetime storms and the reinsurance market – where insurance companies insure their own risk – remained competitive.

Read more: Here is why the price of home insurance has gone down, not up

The AA said that home insurance premiums had risen slightly, by 2.3 per cent for the year to June 2016.

Consumer groups continue to champion not auto-renewing policies and said shopping around was the best way to get a good deal on home insurance.

Insurance premium tax is scheduled for a further rise,m to 10 per cent, from 1 October 2016.

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