Flooding pushes up home cover
Saturday November 15 2008
THE cost of insuring a home and its contents rose by 7pc last month and premiums are soon predicted to rise again by the same amount.
Insurance companies are trying to recoup losses from the €100m cost of flooding in the summer, with a spike in burglaries also being blamed for pressure to raise premiums.
Inflation figures produced by the Central Statistics Office show that property insurance rose by 7.2pc in October, the first rise in insurance rates in years.
Analysts with stockbrokers Davy said the rise in home insurance contrasted with motor insurance where premiums were static last month.
"The increase in dwellings insurance is a result of increased claims due to storms and flooding damage and an increased incidence of break-ins that is typically present in economic downturns," analyst Stephen Lyons said.
The downpour last August and September is expected to cost insurance companies between €80m and €100m in claims.
But insurers are also attempting to make good higher costs of re-insuring the policies they take on, according to president of the Irish Brokers' Association Canice O'Reilly.
He said the members of his association had no interest in premiums rising but the industry was being hit by a huge rise in burglaries and a big jump in fraudulent claims.
Mr O'Reilly quoted from a recent Eircom PhoneWatch burglary report which showed that thefts from homes have jumped by one third in the last year.
Fraud
The report estimates that €100m worth of goods were stolen from homes in 12 months. Break-ins and burglaries tend to rise during a recession, past experience would indicate, insurance sources said.
Recent figures from the Irish Insurance Federation show there has been a 40pc hike in fraud claims reported to the federation in during just one week of its recent anti-fraud campaign.
Some of the fraudulent cases exposed in recent months included exaggerated injuries, policyholders holding multiple policies, insuring the same items and staged burglaries.
"When money is tight and people lose jobs we see an increase in fraudulent claims. We also see a rise in household claims during a downturn that people would not bother claiming for when times are good," Mr O'Reilly said.
The head of the Irish Brokers' Association said he now expected premiums for property insurance to rise by another 10pc on top of the rise of 7.2pc last month.
"I am not advocating an increase in premiums but I do feel they are on the way up," he added.
- Charlie Weston Personal Finance Editor
