Saturday 24 September 2016

Premiums for home insurance still competitive - but look set to rise

John Cradden

Published 26/07/2015 | 02:30

Recent CSO figures show that home insurance premiums have already risen by 3pc since January
Recent CSO figures show that home insurance premiums have already risen by 3pc since January

Car insurance premiums have risen by over 16pc since the start of the year - and are predicted to rise even further in the near future. But while premiums for home insurance have remained comparatively static, industry experts say it's only a matter of time before they will rise too.

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A price comparison survey of 15 insurers seen by the Sunday Independent suggests that premiums have actually fallen by between 5pc and 10pc over the last 12 months.

Using a number of scenarios from the last home insurance price comparison survey by the National Consumer Agency in July 2014 (before it was merged with the Competition Authority), home insurance broker Insuremyhouse.ie found that in five out of seven scenarios they compared they were able to get a cheaper quote.

"The reason behind this is most likely that, on the whole, premiums have fallen over the last 12 months and are now at very competitive rates," said Jonathan Hehir of Insuremyhouse.ie.

He said the exception was in contents-only cover for those in rental properties, "where we've seen some price hardening".

However, the broker's survey did not include quotes for an eighth scenario in the NCA survey of a terraced two-bed house in Limerick City that had claimed for €10,000 worth of flood damage - although no insurer would quote in the 2014 NCA survey.

None of the other properties were flood risks or had issues with subsidence.

While the survey hints at greater competition in the market, he added that prices may level out later this year and are unlikely to fall any further.

Recent CSO figures show that home insurance premiums have already risen by 3pc since January. It also follows the release of a report last week from the Society of Chartered Surveyors Ireland showing that the national average costs of rebuilding a house has risen by 4pc so far this year, which may push up the costs of some premiums.

Mr Hehir also said that there still remained some large price differentials between providers, so the advice is still to shop around.

The widest disparity in prices was for a three-bedroomed bungalow in Midleton, Co Cork with rebuilding costs of €200,000 and contents of €50,000, which got quotes ranging from €254 to €700 - a difference of €446.

Quotes for a four-bed semi-detached house in Newbridge, Co Kildare with rebuilding costs of €145,000 and €20,000 contents varied from €208 to €622 - a €414 difference.

Another interesting finding - albeit an anecdotal one - is that some insurers are introducing discounts based on a home's BER (Building Energy Rating), with the grounds being that the more a property is well-insulated, the lower the risk of incidents like burst pipes.

"This is a relatively new phenomenon and not yet widespread across the industry," he said.

Otherwise, the usual discounts apply for things like alarm systems, particularly monitored ones.

"While these may have been expensive a few years ago the cost of alarm monitoring has reduced significantly so may be worth looking into," said Mr Hehir.

Specifying a higher excess will reduce your premium as well, but also check policy 'add-ons' such as accidental damage.

"There's little point in specifying valuable items such as iPads and bicycles if you opted for a higher excess, say €500."

On the motor insurance side, the Irish Brokers Association has said that premiums could rise by as much as 25pc by the end of this year, which it blamed on prices been pushed to artificially low levels by heightened competition, thereby hitting insurers' profit margins.

However, like home insurance, there remain large differences in motor insurance premiums, which means it pays to shop around for quotes.

In a recent car insurance price comparison by the Competition and Consumer Protection Commission, a 47-year-old driver in a 2011 Toyota Avensis was given quotes ranging from €255 from Allianz to €742 from Zurich.

The same driver, unlucky enough to have to insure his 19-year-old son or daughter with a provisional driving licence as a named driver, was quoted as much as €3,178 by Aviva, while the cheapest was FBD at €1,929 - a difference of €1,249.

Overall, Allianz gave the lowest quotes in six out of the nine quotes obtained for fully comprehensive insurance.

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