Home insurance premiums remain flat as competition increases

The data from Consumer Intelligence - which is used by the ONS to calculate official inflation statistics – shows premiums were virtually unchanged in the past three months.

Its quarterly Index shows that prices remain nearly 10% lower in July compared with February 2014, when the index started, despite concerns the Insurance Premium Tax increase in November last year would send costs soaring.

Instead, relatively low claims for storm and flood damage and increased competition for business has kept prices flat.

Prices in the past three months have fallen on average by 0.2% and are unchanged since December 2015.

Insurers have also not passed on the cost of the £180m industry levy on the Flood Re scheme to lower premiums for the 350,000 households in flood risk areas.

Phil Paterson-Fox, Consumer Intelligence key account director, said: “Storm and flood damage costs have proved to be less expensive for insurers than feared and were already provided for.

“Competition for business remains intense and the impact from last year’s Insurance Premium Tax rise has proved short-lived so customers are benefiting in contrast to premium rises across other sectors."

In Q4 2015, the AA British Insurance Premium Index saw small increases in the average quoted Shoparound premiums for home buildings, contents and combined policies - the first since 2011.