The Brits, after seeing the torment of floods, is now experiencing record home insurance premium. The premium, closed at £218.6, reached the zenith in the last quarter.
Consequential to devastation caused by floods in the UK last year, premiums for home insurance has become the highest in the decade, as reflected in the figures compiled by Automobile Association (AA). The premium touched peak in the last quarter when the premium increased to an average £218.6 (1.4%) for annual insurance policy as compared to the previous quarter. This is highest from July 1994 when AA started with British Insurance Premium Index, as reported by The Independent.
Premiums for automobile insurance are also increasing, maintaining steady growth from April 2006. Complete car insurance premium increased by 2.4% to £629.04 on an average, whereas third party theft and fire policy rose by 1.5% to £628.60, as per the AA.
The rationale for such hike in home insurance premium lies in the huge amount, i.e., £750 Million, of domestic property claim, which has been compensated by the insurance companies owing to the terrible floods in summer 2007 in some parts of the UK.
This being the cause of such high premiums, the AA’s insurer Relations Director, John Close, has pushed the government to inculcate "robust provisions" in Climate Change Bill to ascertain the durability and sustainability of upcoming buildings against flood and blizzard, especially when there are continuous flood intimidation.
Hike in automobile insurance premium is on altogether different grounds. Car insurance is claimed on revamping the damage caused by accident. Contemporary cars are assembled with costly secondary security systems (like airbags), lightweight stuff, and higher crumple zones, which makes compensation amount paid by insurance company to rise, thereby leading to increased car insurance premium.
For automobile insurance premiums, Mr Close stated that personal injury claims, which increase by roughly 10% every year, are the chief reasons for inflationary economy.
According to the Research Analyst at RNCOS, “Insurance claims are being identified as the main cause of escalated insurance premiums and hence, the insurance companies need to deploy various strategies to pull the premiums down to make it more user-friendly. Companies need to innovate the ways to keep the number of claims low along with doing some brainstorming sessions on the financial procedures which can lead to lowered premiums.”
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