Home insurers record a jump in subsidence payouts as volume of claims rises

Subsidence claims were partly behind an annual increase in the volume of home insurance payouts between April and June, according to the Association of British Insurers (ABI).

It said the equivalent of £8.6 million was paid out every day between April 1 and June 30.

The value of the average claim paid rose by 24% annually, to £4,300.

A total of £782 million-worth of home insurance claims was paid out in the second quarter of this year, up by 11% compared with the second quarter of 2022.

The increase has been partly driven by a rise in subsidence claims following last summer’s heatwave, which were settled after a period of monitoring and assessing the damage, the ABI said.

The total value of subsidence payouts, at £54 million, jumped by 21% on the £45 million paid in the second quarter of 2022.

The ABI said that its household insurance premium tracker shows that in the second quarter, the average price paid for a combined buildings/contents policy rose by 10% annually to £329. A year earlier, the average price paid was £299.

It said that, despite rising claim costs, property insurers are doing all they can to offer competitive deals.

The ABI said that, in 2022, for every £1 insurers received in home insurance premiums, they paid out £1.22 in claims and expenses.

It added that it cannot speculate on future prices, as individual insurers will make their own commercial decisions.

Mervyn Skeet, the ABI’s director of general insurance policy, said: “These latest figures show that despite rising claims costs, insurers continue doing all they can to offer competitively priced cover to UK households.”

Recent figures from data analytics firm Consumer Intelligence indicate the average premium quoted for a buildings and contents policy was £212 in July, marking a 25.7% increase compared with a year earlier.

Last week, the Financial Ombudsman Service (FOS) said that the volume of complaints to it about motor and buildings insurance had reached a five-year high.

Between April and June 2023, the FOS received 3,869 complaints about car and motorcycle insurance, alongside 1,776 buildings insurance cases.

It was the highest combined quarterly total number of new complaints about buildings and motor insurance since April to June 2018.

The increase appears to be caused by several factors, including complaints about delays on claims payouts, the service said last week.

The ABI said last week that it was concerned to see the ombudsman service’s figures and insurers work hard to process claims as quickly and efficiently as possible while managing challenges beyond their control that can impact on timings.