The average price of a combined home insurance policy (building and contents) in Ireland dropped by €15 between the second and third quarter of 2011 from €494 to €479, representing a 3% decrease, according to the latest data from the AA Ireland Home Insurance Premium Index.
With households potentially facing cuts in child benefit and increased VAT on essential household goods plus carbon taxes on their home heating fuel in 2012, the decrease in home insurance premiums offers a morsel of good news to homeowners in the run up to another tough budget.
The AA Ireland Home Insurance Premium Index particularly offers good news to Dublin homeowners in the short term where combined home insurance premiums fell for a second consecutive quarter, down 5% overall since the beginning of the year.
AA Ireland Home Insurance does however point out that this respite could be short lived in the wake of flood damage to properties and personal belongings last October when Dublin was the worst hit region.
The cost of floods to the Irish Insurance Industry is estimate to be between €125 to €150 million.
“The last week of October was a very difficult time for many homeowners and businesses and an expensive one for insurers as we experienced some of the worst flooding to hit our capital in decades.” Says John Farrell, Director of AA Insurance. “In addition to Liffey tributaries such as the Dodder, Poddle and Camac bursting their banks we also saw areas not typically thought of as being at risk of flooding very badly affected. As a result, we’re likely to see premiums trend upwards over the coming months as insurers work to balance their premium income with their claims costs. The new 2% levy on all non-life and health insurance policies is also due to take effect from the 1st of January 2012 which will also drive up premiums. ”
The AA Ireland Home Insurance Index also reveals that despite a 4% price drop in premiums outside Dublin during the third quarter, prices were still significantly higher than those being paid in the capital. Coming in at €500 on average, premiums around the country were typically 11% higher than those being paid by Dublin homeowners.
The Index also reveals that premiums for properties with buildings sums insured of less than €250,000 dropped by 5% while those properties with buildings sums insured for more than €250,000 fell by 2% during the third quarter.
AA Ireland Home Insurance also raises concerns that insurance premiums could be adversely affected by diminished consumer confidence in the wake of next week’s budget announcement. “Come next year household will have less money again coming in and some people may look unwisely to their home insurance as a place to cut costs.” Says Farrell. “If policyholder volumes decrease, insurers may need to increase premiums to compensate for lost revenue.”
The AA urges homeowners to look for value and shop around for their home insurance rather than forgo it or reduce their level of cover. With No Claims Discounts becoming increasingly more prevalent across AA policies and right throughout the Irish home insurance market, the AA reports that shopping around can be a highly worthwhile exercise.
“While you may not make a claim for many years, if something does happen your home, insurance cover could be the difference between losing everything.” Says Farrell. “Before allowing your cover to lapse think of what would happen to your family if your home was devastated by fire or how you would cope with a repair bill running into the thousands following flood damage for example.”
AA Ireland Home Insurance also encourages a zero tolerance policy towards insurance fraud. “During tighter economic conditions fraudulent claims increase and frustratingly this puts inflationary pressures on all our premiums. If you suspect someone of making a fraudulent claim, react. Call ‘Insurance Confidential’ on 1890 333 333 to report the crime.” Says Farrell.
Those wishing to share their views on factors affecting the Irish Insurance Industry are invited to post a comment on the AA Ireland Blog at blog.aaireland.ie or send an email to firstname.lastname@example.org
Notes to the editor
The AA Insurance Premium Index
The AA Ireland Insurance Premium Index, launched in January 2011, aims to track the quarterly movement of home insurance premiums in Ireland. To facilitate this, we began tracking the market average premium for combined home insurance premiums at the beginning of 2011. The index uses a basket of 200 home insurance risks that is representative of the Irish home owning public. It obtains premium prices against these risks for combined policies (buildings and contents) from a wide range of insurance providers who operate in the Irish market place. The Index tracks a market average premium (average of all quotes received).
Notes to the editor;
Fig. 1 Market average premiums for combined home insurance policies (Based on a basket of 200 risks quoted for by 9 insurance providers):
|Q1 2011 (FEB)||Q2 2011 (JUNE)||Q3 2011 (SEPT)|
|Buildings SI < 250K||€424||€459||€438|
|Buildings SI > 250K||€558||€579||€568|
Fig. 2 Comparison of Q1 2011 market average premiums for combined home insurance policies with equivalent Q2 2011 figures (Based on same basket of 200 risks quoted for by 9 insurance providers):
|Q1 2011 (FEB)||Q2 2011 (JUNE)||€ Decrease/increase Q2 on Q1||% Decrease/increase Q2 on Q1|
|Buildings SI < 250K||€424||€459||€35||8.30%|
|Buildings SI > 250K||€558||€579||€21||3.80%|
Fig. 3 Comparison of Q2 2011 market average premiums for combined home insurance policies with equivalent Q3 2011 figures (Based on same basket of 200 risks quoted for by 9 insurance providers):
|Q2 2011 (JUNE)||Q3 2011 (OCT)||€ Decrease/increase Q3 on Q2||% Decrease/increase Q3 on Q2|
|Buildings SI < 250K||€459||€438||-€21||-5%|
|Buildings SI > 250K||€579||€568||-€11||-2%|