Increases in Insurance Premium Tax are driving up home insurance prices despite the mild winter keeping claim costs down, according to Consumer Intelligence.
The insurance market research company has said that the relatively mild winter with low claims for storm damage would have limited price rises but an Insurance Premium Tax rise in October, and another due in June taking the rate to 12%, will keep costs rising.
Average home insurance costs rose 2%, which was below the 2.7% rate of inflation for the economy as a whole, in the year to April to £121, and were virtually unchanged in the past three months. Consumer Intelligence said that prices were rising fastest for over-50s householders who are seeing above inflation increases of 3.6% to £117 compared with just 1% for under-50s to £124.
Home insurance customers in the North East are experiencing the highest increases in premiums with average rises of 3.3% in the past year while prices rose 3.2% in Yorkshire & Humberside.
Londoners pay the highest premiums at £144 while householders in the North West have seen prices rise by just 0.9% in the past year. However, home insurance costs are still 7.7% lower than in February 2014 when Consumer Intelligence first analysed data.
John Blevins, Consumer Intelligence’s pricing expert, said: “There has been little movement over the last quarter, and prices have remained fairly static.
“The benign weather has helped to keep premiums down, although it is worth noting that IPT rates have pushed premiums up by 2% in the last 12 months and we expect premiums to rise further in June when it increases to 12%.
“There is no indication that prices will come down and we expect another year of relative stability although new rules making insurers include last year’s premium with renewals may have some impact on new business rates.”