JEFF PRESTRIDGE: Why are home insurance costs soaring?



In the broader economy, inflation can be tamed – at least for now – but not when it comes to essential insurance.

A few days ago, market research firm Consumer Intelligence reported that home insurance costs were skyrocketing. Worryingly, there is little evidence to suggest that current price increases will slow down sooner or later.

Over the past year, Consumer Intelligence said the average price of home insurance increased nearly 42 percent — the highest increase since the company started collecting price data a decade ago.

The increase of 10.3 percent in the past three months was also the largest quarterly increase since the start of record figures.

Homeowners who have filed recent claims have experienced the largest premium increases: an average of 50 percent for both construction and water-related claims.

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

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

Clive Sledger, from Richmond in North Yorkshire, is one of them.

Last year his car insurer 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 from Confused.com, reducing the increase from 149 per cent to a more manageable 87 per cent.

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

“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 a much better deal.

What’s worrying is that, if this tide of premium increases doesn’t turn soon, we’ll see more homeowners take a gamble – and leave their property and assets uninsured. It’s what’s happening in the United States right now.

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Car owners are legally required to take out insurance, but many drive without cover – risking a hefty fine, points on their license and disqualification.

Others, especially the elderly, simply give up and sell their motorcycles.

In its manifesto, Labor promises to ‘tackle’ the rising costs of car insurance (no word on home insurance) without saying how. We await his solutions. They cannot be as half-baked as the regulator’s failed attempt to bring order to the two markets. Certainly?

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

jeff.prestridge@mailonsunday.co.uk

Long on promises, short on tax guarantees

The Labor manifesto consisted of long pages (over 130), photos of Sir Keir Starmer (far too many) and promises (most, we were told, were guaranteed to boost the economy).

Yet there was little about what Sir Keir and his financial lieutenant Rachel Reeves had in mind in terms of an arsenal of taxes they could raise if the economic miracle they promise fails to materialize – or for that matter, if political dogma simply prevails. better of them.

Taxes that undermine wealth creation appear to be the most vulnerable. If I were a betting man, I’d put a fiver on increases in capital gains tax rates being introduced before 2029 comes our merry way. And I would spend another five cents on a higher tax credit on the abolished pension contributions. I hope I’m wrong.

It’s not just the elections you have to vote for…

Well paid: national boss Debbie Crosbie

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 entitled to vote at (or ahead of) the mutual society’s annual general meeting on July 17.

Although the national vote is apparently as much a foregone conclusion as the outcome of the general election, it’s important that customers have their say – not just because the association will make a £1 donation to charity for every vote cast do (with a maximum of £500,000).

As with all building societies, it is the members who own Nationwide, so they should not miss the opportunity to vote. Most will vote online – a simple process. But don’t choose the ‘fast’ voting option, which means you end up supporting all the resolutions proposed at the AGM. Instead, take time to read the association’s summary financial statement for 2024 before you vote – and review the brief biographies of the directors (11 in total) seeking re-election to the board. I particularly urge members to read the section of the statement regarding the remuneration of the association’s directors.

In the year to April 2024, CEO Debbie Crosbie received compensation of £2.41 million. Although less than the £3.4 million she earned in the previous financial year, the 2023 total was increased by £1.7 million – a one-off payment to compensate her for the loss of variable pay she would have received if she had chosen not to do so. take control of Nationwide and remain boss of TSB instead.

Excluding this bonus, Crosbie received an overall pay increase of just under 38 percent. Some members will see this increase as staggering, both in absolute terms and in percentage terms (earnings growth in the economy currently remains around 6 percent).

Others will see it as a just reward for running a successful business – one that is committed to maintaining a strong presence on the high street.

Whatever your opinion as a Nationwide customer, you can express it by voting.

Calling to ensure no household is left out

Improving the country’s financial health is not just about governments, now or in the future, ensuring that public finances are in good order.

Of equal importance is building a society where everyone has access to the services and resources needed to take care of 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 publish the preliminary findings of research confirming that many households are being financially excluded – whether this is due to not being part of the new digital financial world or not having access to cheap credit or physical cash.

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

The independent committee has influence. It is made up of experts from the financial sector, charities and the regulatory world. They include Sian Williams (director of Switchback, a charity that helps ex-prisoners successfully integrate into society) and John Howells, director of the national Link ATM network. The FIC says any national financial inclusion strategy should be built around five key themes.

These range from easy access to essential 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 will embrace them when the revolution (barring a miracle) begins on July 4.

Not a dick about these issues in his manifesto, mind you.

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