What puts the premium up or down makes no sense

kitla

I am baffled by how changes to our details affect the price of our home insurance renewal. I phoned Tesco to make some small changes. There were 3 adults and a child living here, now only 2 adults - that put the premium UP by £21 !  I know its not much, but how on earth can our risk be higher with less people & no children living here?   Also the last few years our premium was affected by a large claim for a fire in a property my husband part owned. I asked remove it from the renewal as it was 5 yrs ago. Well that reduced the price...by just £2.50     Do they just pull these figures out of thin air?

k12479

So 3 adults + 1 child to only 2 adults. Well, there's now only 2 people to potentially leave taps running/oven on/doors open so probably less risk of claims, but then there's only 2 people to notice things/be around so probably more risk of damage being more severe or of the house being unoccupied.

cw8825

there are multiple things they use for pricing which are all judged different by each insurer
1 may say having only 2 adults means the house will be unoccupied more where another may have used your thinking that less occupants is less risk

Also if your doing it by phone there is the chance part of the charge is an admin fee

the fire claim from that long ago was likely having little impact on pricing anyway so that's the reason for the negligible reduction

dunstonh

I asked remove it from the renewal as it was 5 yrs ago. Well that reduced the price...by just £2.50 

It would have already been phased down over the years in terms of additional cost.  Plus, a claim like that is already mostly factored into the premium as a risk event that anyone could suffer.

Do they just pull these figures out of thin air?

No. They are based on statistical analysis.

If you think of a Venn diagram, it may help you understand.    You will be in many circles which will drive pricing but there will be some overlapping circles which will influence the price positively or negatively. 

Everytime a circumstance (circle) is added or removed, it can have a knock on effect with the other circumstances (circles).

Children removed means accidental damage less likely (but you may or may not have accidental damage).  It also means the house is less likely to be occupied as much.     House less likely to have low cost items (children's toys) but excess income that used to be spent on children is now spent on luxury/consumer personal items which are higher cost.

There will be many influences in the stats

Insurers have sophisticated modelling. It's not perfect but it gets them closer than plucking figures out of thin air