Home insurance premium hikes loom

HOMEOWNERS looking to renew their home insurance should brace themselves for rises in premiums of up to 15% by the end of the year, the Irish Brokers Association warned yesterday.

It is understood that global trends, in addition to the increases in pay-outs as a result of successive bad winters, are likely to lead to more increases in the cost of home insurance.

Director of general services at the association, Brian McNelis, said: “Reinsurers have inferred that rates will be rising on home insurance premiums over the next quarter.

“This is unsurprising given the catastrophic weather conditions which have been experienced all over the world of late, in particular those suffered by Japan and New Zealand, all of which have a significant impact on the wider insurance market which in turn has a ripple effect on the domestic market in the form of higher premiums.”

Where reinsurers lead, insurers tend to follow, meaning hard- pressed householders face the possibility of further price hikes before the year is out.

Instead the IBA recommended that homeowners look at the type of insurance they have and make changes to get better value for money.

Mr McNelis said: “The rates may rise by 10%-15% and while there is nothing homeowners can do to stop this, there are measures that can be taken to ensure that people are getting the best value.

“For instance, a lot of people are over-insured on their property and under-insured on their contents. This should be looked at.

“Also, people who bought home insurance from the banks when they were initially taking out their mortgage tended to insure at the purchase price as opposed to the reconstruction costs.

“Savings can now be made as these costs are now less and have come down significantly from the peak. Insurance companies will not reduce sums insured unless instructed by the homeowner or their broker.”

The IBA recommended that people use brokers to scour the market for the best prices and cover in the marketplace, claiming that on a house with typical insurance costs of €600 a year some €100 could be saved by ensuring the appropriate policy is taken out.

Michael Horan of the Irish Insurance Federation said €765m in burst pipes and flood claims had been paid out in 14 months and that there had been a 7% rise in the cost of household premiums in July this year compared with the same month in 2010.

However, he said it was “impossible” to speculate what would happen in the Irish insurance market in the coming months.