Why are our home insurance costs so high?

Inflation may be tamed in the wider economy – at least for now – but not in basic insurance.

Market research company Consumer Intelligence reported a few days ago that the cost of home insurance is going up. Worryingly, he said there is little evidence to suggest that the current price increases will fade sooner rather than later.

Over the past year, Consumer Intelligence said the average quoted price of home insurance has risen by nearly 42 percent — the highest increase since it began collecting price data a decade ago.

The 10.3 percent gain over the past three months was similarly the biggest quarterly increase since records began.

Homeowners who recently made claims faced the biggest increase in premiums – an average of 50 percent for both building and water related claims.

Motorists are facing a similar premium storm, with insurance costs currently rising by an average of 43 percent, according to comparison website Confused.com.

These increases are indicative of what my mailbag has been telling me over the past 18 months, although many readers have been quoted much higher premium increases at renewal.

Clive Sledger from Richmond, North Yorkshire is among them.

Last year his insurance company wanted to increase the premium on his ten-year-old Kia Ceed by £350 to £585. By shopping around, he managed to find new cover for £440 on Confused.com, reducing the increase from 149 per cent to a more manageable 87 per cent.

Now Saga has attempted to increase its annual home insurance premium from £155 to £353 – a rise of 127 per cent.

“What planet are these people on?” he asked me last week. Not this one, Clive.

Fortunately, Clive, an 81-year-old retired farmer, turned to Confused.com again and got an overall better deal.

Worryingly, if this wave of premium hikes doesn’t reverse soon, we’ll see more homeowners take the risk – and leave their properties and possessions uninsured. This is what is happening in the United States right now.

Car owners are required by law to have insurance, but more are driving without insurance – risking a hefty fine, points on their license and disqualification.

Others, especially older people, simply call it a day and sell their engines.

In its manifesto, Labor promises to “tackle” the skyrocketing cost of car insurance (not a word about home insurance), without saying how. We are waiting for his solution. They cannot be as half-hearted as the regulator’s failed attempt to bring order to the two markets. Sure?

If you have stopped insuring your home and possessions or stopped driving due to rising insurance costs, I would love to hear from you.

jeff.prestridge@mailonsunday.co.uk

Long on promises, short on tax guarantees

Labour’s manifesto was long on pages (more than 130 of them), pictures of Sir Keir Starmer (too many of them) and promises (most, we were told, guaranteed to jump-start the economy).

Yet there has been little on what Sir Keir and his finance lieutenant Rachel Reeves have in mind regarding the range of taxes they could decide to raise if the economic miracle they are promising fails to materialize – or, for that matter, if political dogma he just gets the better of them.

Taxes that remove wealth creation look the most vulnerable. If I were a betting man, I’d put a fiver on capital gains tax rate increases being introduced before 2029, when we arrive on our merry way. And I’d give another fiver for higher tax breaks on pension contributions that are being cancelled. I hope I’m wrong.

It’s not just elections you should be voting in…

The general election isn’t the only vote taking place next month. Around 16 million members – savers and borrowers – of Nationwide Building Society will also be eligible to vote at the mutual’s annual general meeting on (or before) July 17.

Although the national vote is obviously as much a foregone conclusion as the general election result, it’s important that customers have a say – not least because the company will donate £1 to charity for every vote cast (capped at £500,000).

As with all building societies, it’s the members who own Nationwide, so they shouldn’t miss the opportunity to vote. Most will vote online – it’s a fairly easy process. However, do not choose the “quick” voting option, which means that you end up supporting all the resolutions presented at the general meeting. Instead, before voting, take the time to read the company’s 2024 consolidated financial statement – and review the brief biographies of the directors (11 in all) who are seeking re-election to the board. In particular, I encourage members to read the directors’ pay section of the company’s statement.

In the year to April 2024, chief executive Debbie Crosbie was paid £2.41m. Although she earned less than £3.4m in the previous financial year, the total for 2023 has been inflated by £1.7m – a one-off payment to compensate her for the loss of variable remuneration she would have received if she chose not to. to take the reins at Nationwide and stay on as TSB boss instead.

After removing that bonus from the equation, Crosbie earned the same total salary by just under 38 percent. Some members will find this increase staggering, both in absolute terms and in percentage terms (profits growth in the economy currently ticks around 6 percent).

Others will see it as a fair reward for running a successful business – one committed to maintaining a strong position on the high street.

Whatever opinion you have as a nationwide customer, express it by voting.

He calls to make sure no household is left out

Improving the financial health of a country is not just about governments, current or future, ensuring that public finances are in good shape.

Equally important is building a society where everyone has access to the services and tools necessary to manage their personal finances without being excluded or discriminated against.

It is a vision that the Financial Inclusion Commission (FIC) has put at the top of its agenda. This week it will release preliminary research findings confirming that many households are being financially ostracized – whether it’s a result of not being part of the new digital financial world or being unable to access cheap credit or physical cash.

It also calls on both Labor and the Conservatives to prioritize national financial inclusion if they win the general election.

An independent commission has influence. It includes experts from the financial services industry, charities and the regulatory world. Among them are Sian Williams (chief executive of Switchback, a charity helping ex-prisoners successfully integrate into society) and John Howells, chief executive of the national ATM network Link. The FIC says any national financial inclusion strategy should be built around five key themes.

These range from quick access to basic financial services such as bank accounts, physical cash and personal advice, to affordable and well-regulated credit.

These are worthy goals that I support and have written about many times. Let’s hope Labor accepts them when the revolution comes, starting (barring a miracle) on the 4th of July.

Remember that you are no dumb bird about these issues in your manifesto.