UK home insurance costs – no relief in sight

Pearson Ham Group’s Premium Price Index for June reveals that home insurance prices have risen by an average of 34% compared to 12 months ago, with a 0.7% increase over the month. With this, the average home insurance premium now nears £425.

The report noted that over the past two years, home insurance premiums have increased by almost 63%.

Despite the significant rise in premiums, the rate of growth has slowed compared to the first half of 2024, when it peaked at 42% in February. The pricing growth observed in 2024 is unparalleled since 2019.

The trend in home insurance pricing has also varied significantly across regions. Northern Ireland continues to see the largest increases, with a 1.6% rise in June following a 1.5% increase in May, resulting in the highest year-on-year price growth in the UK at 46%.

By contrast, the North East and Yorkshire and The Humber saw the lowest increases in June at 0.3%.

By property type, flats saw the largest home insurance price increase in June at 1.8%, although they have seen the lowest year-on-year change at 35%. Detached and semi-detached properties saw the lowest monthly increases for the second month in a row with a 0.5% rise.

Stephen Kennedy, director at Pearson Ham Group, highlighted that the magnitude of the increase in home insurance premiums is significant.

“Several factors contribute to this trend, not least the extreme weather events and inflation seen in the last year which continue to affect costs. As these factors continue to impact the market, it is likely that we will see sustained pressure on home insurance prices in the near term,” Kennedy said.

In contrast to rising home insurance premiums, the motor insurance market has experienced ongoing reductions in pricing, with a further -1.5% decrease in June. This decline has led to a 12-month price movement levelling out at 12%, compared to its peak of 47% in Q4 2023.

Drivers also saw a consistent decrease by age in June, with those aged 26 and under experiencing a -1.1% drop in rates, while drivers over 60 saw a larger decrease of -1.8%.

Notable reductions in June were also observed for cars valued over £20,000, which saw premium decreases of -1.9%. Regionally, the North East and North West experienced the largest reductions in motor insurance premiums across the UK, with a -1.8% decrease in June.

Frances Luery, product manager at Pearson Ham Group, stated that the reduction in motor insurance premiums is significant and could be attributed to several factors.

“More importantly, we expect this increased competition among insurers to persist, fostering a much more competitive landscape for drivers,” Luery said.

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