Claims on housing insurance across the United Kingdom have declined over 2020, and are forecast to finish the year 12.4% down on 2019.
The world pandemic has had a significant impact on the claims being made across the country, with some areas showing much sharper drops in the total amount claimed. London, for example, will show a 19.32% decrease year on year, with insurers believed to be close to saving £54.1m on payouts in 2020 in the capital alone. Elsewhere, Scotland’s claims are around 18% down, a saving of £32.2m, whilst in Wales claims have dropped by 17.95%, saving £17.3m. It is a pattern repeated around the country, and it may lead to smaller premiums or even refunds according to an industry leader.
“It is not an amazement to see that home insurance claims have decreased in a significant way over 2020, with many Britons stuck at home during a year where very restrictive measures were taken to stop the COVID-19 pandemic,” commented Antoine Fruchard, chief executive of provider Hello Safe.
“Indeed, as we detected with car or health insurance products, the payouts made by home insurers have gone down. Though, until now, the industry has taken no verdict to give back some of the savings made to the policyholders. This is a questionable position when the influence of the economic crisis is just starting to strike most British households and could last for years.”
In the short-term, claims may have dropped, but how the pandemic will affect the industry next year makes it a volatile and unpredictable situation to comment on. It is unlikely that companies will look to refund customers. Still, with savings of around £360m nationwide, there will be pressure on the leading providers to do something positive in light of people’s financial struggles. However, as the country hopefully returns to normal in 2021, it is impossible to predict if the trends seen in 2020 will be sustainable, or whether they will return to normal, meaning a potential for increased payouts year on year.
Changes in cost might not be the only way fewer claims manifests itself within the market. Many of the aspects people protect themselves against, such as burglaries, are not so much of a threat during the pandemic. Business Wire explains how not only are burglaries on the decrease, but a cover for renovations and home improvements have increased. With people at home for increased periods with trends such as working at home remaining popular, there is an increased workload on heating, plumbing and other areas of the home. That type of cover does not require contents, but a more targeted, specialised policy. For example, leading UK home insurance provider HomeServe showcase how insurance can cover different aspects of your home, from the heating system to drainage or electrics. These types of policy tend to have other benefits, like regular services included, offering a different spin on the traditional ‘buildings and contents’ type of cover, which is clearly having to adapt for the modern world.
For now, whilst the insurance industry has seen fewer claims, it still cannot be certain of coming out of the pandemic unscathed, at least until society returns to something as close to normal as possible.
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