Household insurance premiums have finally started to soften at the start of the year, according to the latest data from general insurance provider Berkeley Alexander.
Data showed that premiums fell in 35% of the cases recorded by Berkeley Alexander across its nationwide household book. Of those policyholders who saw price increases on renewal, 46% only saw premiums rise by 5%, while 53% experienced increases under 10%.
Commenting on the latest data, Berkeley Alexander’s Geoff Hall said the change is a “welcome shift” in market dynamics, but there are still risks ahead.
“Premium rate increases have been punishing, driven by inflation and a hard market cycle, but policyholders are not out of the woods yet,” Hall said. “Overriding economic conditions remain uncertain and high claim volumes continue to have a negative impact.”
In the latest Consumer Intelligence Home Insurance Price Index released in January, the average quoted price of home insurance reportedly rose by 10.5% in 2024, but prices have since started to decline.
In the last quarter of 2024, quoted premiums for buildings and contents insurance fell by 2.2%, with the data indicating that most of the price increases last year occurred in the first four months.
Consumer Intelligence also reported that premiums were most commonly quoted between £150 and £199, with 24% of quotes in that range. In December 2024, 54% of customers received quotes below £200, compared to 69% in December 2023.
Meanwhile, households led by individuals over 50 faced faster premium increases, with quoted prices rising by 13.6% in the past year, compared to an 8% rise for under-50s. Under-50s saw larger reductions in premiums over the past three months, with a 2.8% drop, compared to 1.8% for over-50s.
Despite the market softening, Hall said that taking the advice of an expert was vital for clients.
“Advisors still have a vital role to play; they’re the front-line in providing the best possible cover at the right price,” he said.
Hall advised against selling insurance based on price alone, as price comparison sites already offer that approach. Instead, he recommended assessing clients’ lifestyles, vulnerabilities, needs, and priorities to provide suitable cover.
He also emphasised the importance of working with a general insurance provider that offers access to a broad panel of insurers and a range of products. This approach allows advisors to present clients with more options and find suitable cover at a competitive price, he said.
Hall also pointed out that adding a voluntary excess of £100 to £250 can help reduce premiums, both at renewal and when obtaining new quotes.
