Sunday 21 January 2018

Homeowners face 50pc hike to foot €541m insurance claims

Insurance hikes for homeowners Photo: Getty Images
Insurance hikes for homeowners Photo: Getty Images

Paul Melia and Laura Noonan

HOMEOWNERS face paying twice as much when they renew their house insurance this year, as the industry seeks to absorb the half-billion euro cost of extreme weather damage.

The massive €541m payout for November's floods and January's cold spell was revealed by the Irish Insurance Federation (IIF) amid warnings premiums would have to rise.

The total cost -- including €244m for the floods and almost €300m for the big freeze -- was more than the insurance industry paid out for all similar weather damage over the past 10 years combined.

It is also more than half the total household premiums paid over last year, and the equivalent of €10m a day spread over almost eight weeks of freak weather.

IIF boss Mike Kemp said the enormous claims would inevitably lead to higher premiums.

He declined to be specific on the rate of hikes, but admitted he "wouldn't be surprised" to see rises of as much as 20pc.

However, senior insurance industry figures said the increases could be much bigger. "In some cases, rates have already gone up by about 50pc over the last six months," said one. "You'll probably see them rise another 35pc in the coming months.


"Someone renewing their policy over the summer could easily see their premium double."

Insurance sources attributed the recent rises in premiums to a €174m loss suffered across the property insurance market in 2008, coupled with the high costs of November's flooding.

And the next wave of rises will stem from the Big Freeze claims, which are just kicking in.

"Events that were once every 10 or 20 years are now happening once every two or three years," said one insurance executive. "Prices have to reflect that. Prices were at record lows, now they have to go up."

His sentiments were echoed by Mr Kemp, who described the impact of the weather events as "very stark" with "obvious implications for the Irish insurance sector".

"Premiums will follow claims, whether they go up or down," he added.

Mr Kemp said homeowners living in some parts of the country could find it difficult to secure cover, though he said cases of cover being completely refused were "very, very rare".

The November floods hit counties Cork, Galway and Clare hardest, with claims from commercial and household property of over €141m, €23m and €16m respectively.

Then the freezing weather conditions from late December running into the New Year affected the entire country. Again, Cork (€38m) and Galway (€23m) were badly hit while Dublin (€33m) also suffered.

Last night, the Consumers Association of Ireland said that double-digit increases could result in homeowners being unable to afford insurance, and that companies had to recognise that customers were already paying for risk.

Chief executive Dermott Jewell said: "They have already increased premiums across the board over the last 18 months, and it has to be borne in mind by the industry that any double-digit increase has the potential to drive consumers away from insuring their property.

"The industry needs to keep in mind to see what further injections they can make through cost-cutting exercises, especially in marketing, to ease price hikes."

Irish Independent

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