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The Hard Market: Why now is the time to use a broker for your home insurance

The insurance market, specifically the UK home insurance market, has changed over the last few years. For as long as many brokers can remember, it has been a “soft”, buyers’ market. It’s now shifted to what is known as a “hard market”.

A hard market is brought about by a reduction in insurers’ capacity and their appetite to write insurance. This reduces competition and can lead to restricted cover, higher premiums and more restrictive terms.

Now, more than ever, you need a trusted adviser to help you get the best home insurance cover at the best price.

More of this…

  • Premium increases
  • Restrictive terms added to policies
  • Insurers not offering renewal terms or quotes for new business
  • Insurers closing new business or leaving the home insurance market altogether

…and less of this

  • ‘Appetite’ for new business
  • Flexibility if your circumstances are less than perfect
  • New insurers coming into the market
  • Insurers competing for new clients and lowering their prices

A bit of background

The market has always cycled up and down over the years. But the following factors have contributed to the market hardening:

  • Insurer solvency rules mean that they now need to hold more spare capital. This is good because it reduces the chance of bankruptcy, but it also reduces insurers’ capacity to write business and has acted as a barrier for entry for new insurers to come into the market
  • The cost of casualty insurance has risen beyond the level insurers were expecting. Casualty insurers were hoping that profits from their property insurance divisions would help offset this and that 2020 would be a good year with no big claim incidents, but then storms Ciara and Dennis struck early in 2020. These were both 1 in 100-year events. Property rates were already too low to cover the cost of claims, which are expected to be circa £425 million[1].
  • Up until May 2022, interest rates were low, so insurers’ investments couldn’t be relied upon to shore up the property and casualty underwriting losses.
  • So, things were looking poor already. Then Covid-19 struck. The estimated cost to UK insurers alone is £6.2bn and worldwide it’s the costliest insurance event on record.[1]
  • Covid, Brexit and the war in Ukraine have increased building costs and, coupled with inflationary pressures on buildings and contents index-linking, home insurance premiums are increasing in double-digit figures before any insurer rate increase.

What does this mean for you?

Premiums are rising and underwriters are likely to be quite strict in their renewal terms or acceptance of a policy in the first place. Already, we have seen some insurers increasing their minimum premium and requiring risk improvements such as security enhancements.

Some insurers are imposing a rate increase, with a ‘take it or leave it’ attitude. If your insurer is exiting the home insurance market altogether, such as Home & Legacy, you will not be offered renewal at all, so you will need to look elsewhere.

How Aston Lark can help

More than ever, you need an effective broker to fight your corner and negotiate with underwriters. You need a broker with buying power and the experience and knowledge to argue your case and seek quotes from trusted alternative insurers.

Now is the time to ask a broker to help with your home insurance

There are:

  • Still deals to be had
  • Discounts to be found, and
  • Clever ways of reducing your premium

If you’re not sure whether you’re on the best policy for you, then call Aston Lark on 020 8256 4901 and we can review your current cover.