Home Insurance Up c£100, Car Insurance Down c£100 - Why?

GSP

My car and household insurance renew in mid October, and I have received the latest quotes from my provider.

Last year, I am sure my household insurance was relatively the same as the previous year, but my car increased over £100. I shopped around for another provider for the car insurance, but none came out better so I stuck with the same provider.

This year, the car insurance has gone down to the previous year’s levels, but household insurance has gone up by £193 to £315. I have looked at other provider’s for this insurance, but the again this was futile as my current provider’s quote was £50 cheaper than the search on the market.

Does anyone know why the flip flopping in these prices?

DullGreyGuy

Consumer insurance is a highly commoditised distress purchase; people treat themselves to a policy from Hiscox to be able to brag to their mates down the pub. As a consequence the majority aim to get the cheapest prices they can for their target market.  

Car insurance spiralled during covid thanks to 1) massive increase in secondhand vehicle prices, 2) part shortages meaning more vehicles written off or long hire bills awaiting parts and 3) a spike in fraud due to the economic situation. These problems didnt instantly fix themselves when the covid crisis ended but have been slowly getting better hence some insurers are starting to ease off the increases.

Home insurance had a more mixed bag during covid as whilst materials became very expensive, even more so once lockdowns etc ended and building work could recommence. This was partially offset by a reduction in Escape of Water claim values because people were at home more so when a pipe burst it was spotted much quicker limiting the damage. In the last couple of years however Home has had a large spike in weather related claims with many last year reporting a 20-30% increase from the prior year which itself saw a spike. It's also been the perfect storm of hot dry summers (bad for subsidence) with very wet winters (storm damage, flooding).

All consumer insurance is short tail (ie within a year of a policy ending 99%+ of claims are settled) and so trends have much faster impact but also recede quicker. Compare that to say Marine, where a former client still had dozens of open claims from the 1980s, which is a fairly long tail (though nothing compared to industrial disease) prices are much less volatile because it takes many years for changes to start flowing through the claims experience. It took nearly 8 years for Marine insurers to take a negative stance on ships carrying EVs and that was considered a fairly quick response. 

chrisw

I've long since stopped wondering about the vagaries of insurance. It may just be the alignment of the stars but it is what it is.

GSP

DullGreyGuy said:

Consumer insurance is a highly commoditised distress purchase; people treat themselves to a policy from Hiscox to be able to brag to their mates down the pub. As a consequence the majority aim to get the cheapest prices they can for their target market.  

Car insurance spiralled during covid thanks to 1) massive increase in secondhand vehicle prices, 2) part shortages meaning more vehicles written off or long hire bills awaiting parts and 3) a spike in fraud due to the economic situation. These problems didnt instantly fix themselves when the covid crisis ended but have been slowly getting better hence some insurers are starting to ease off the increases.

Home insurance had a more mixed bag during covid as whilst materials became very expensive, even more so once lockdowns etc ended and building work could recommence. This was partially offset by a reduction in Escape of Water claim values because people were at home more so when a pipe burst it was spotted much quicker limiting the damage. In the last couple of years however Home has had a large spike in weather related claims with many last year reporting a 20-30% increase from the prior year which itself saw a spike. It's also been the perfect storm of hot dry summers (bad for subsidence) with very wet winters (storm damage, flooding).

All consumer insurance is short tail (ie within a year of a policy ending 99%+ of claims are settled) and so trends have much faster impact but also recede quicker. Compare that to say Marine, where a former client still had dozens of open claims from the 1980s, which is a fairly long tail (though nothing compared to industrial disease) prices are much less volatile because it takes many years for changes to start flowing through the claims experience. It took nearly 8 years for Marine insurers to take a negative stance on ships carrying EVs and that was considered a fairly quick response. 

Thanks very much for your reply to this.