Month: November 2023

Inflation has been a key theme in the UK in 2023 and now PM Rishi Sunak has announced UK inflation has dropped to it’s lowest level in two years.

Inflation is a key theme for the UK insurance market in 2023, as it is across the wider economy. Ignoring the fluctuations in the housing market, the construction sector has maintained a rapid and continued rise in the cost of labour and materials due to Brexit and the emergence from the Covid pandemic, with prolonged periods of Business Interruption and reduced business resilience, both financially and operationally.

The motor market also continues to be impacted by double digit increases due to rising costs of repair, a shortage of parts worldwide, the additional costs associated with electrical vehicles and the number of vehicles on the road now returning to their pre-covid levels.

With inflation halved, insurers have been recently relaxing index linking from its market peaks of 15% – 20% to somewhere nearer 5% which in turn should help reduce premium increases at renewal.

Historically index linking has been between 2% and 4% so with inflation halved there are glimmers of hope that we are getting back on track to previous levels.

What is index linking?

The rebuild value: This is the amount it would take to rebuild your property again.

The sum insured: This covers inflation during the insurance year, on top of the rebuild value.

Index linking:  Automatically adjusts the rebuild value when costs rise due to inflation. But it’s not just tied to inflation rates—it’s linked to how inflation affects different things needed to rebuild a home. So, there is no need for you to constantly revalue your property.is like a magic formula used by the insurance market to make sure your property doesn’t become underinsured.  It applies for both buildings and contents insurance.

How to Find Your Property’s Rebuild Cost? To make sure index linking works its magic correctly, you need to start with the right rebuild value. We recommend Rebuildcost Assessment who will professionally ensure your buildings are insured for the right amount.

Whilst insurance premiums have continued to increase, we are always consistently checking the whole market for each client to ensure we are sourcing the most competitive prices. As such we are retaining 97.3% of our clients business through these challenging times and are hopeful that the above announcement from the government will start to slowly have a positive impact on the insurance market.

General research shows the cost of car insurance went up by a significant 58% over the past 12 months. The average cost of a comprehensive car insurance policy is now £924.

Drivers aged 18, for example, paid £2,999 for their policy, on average – more than triple the national average. It’s also £1,415(88%) more than a year ago. This is the most expensive age for car insurance.

This is the seventh annual price rise in almost 2 years.

One of the reasons for this may be because of the continued rise of electric vehicles which means an increase in expensive, technologically advanced cars. Registrations for battery electric vehicles have  increased by almost 35% compared to last year. And with some manufacturers stating that they’re only going to make electric vehicles in future, it’s likely this will continue to rise. That’s despite the prime minister’s announcement that the ban on selling new petrol and diesel cars will be delayed until 2035.

These electric vehicles come with a higher price tag and enhanced technology, so cost more to repair after an accident. Also, the supply chain is still feeling the effects of the pandemic. So there are often delays and backlogs for electric vehicle repairs.

The expense of electric vehicles has led many drivers to turn to second-hand cars. Because of this, they’re keeping their value for longer. This means more expensive claims for insurers if the car is a write off after an accident. This pushes up insurance costs for drivers.

Insurers say the main culprit is inflation. Rising energy bills and the higher cost of paint and materials have added to the cost of repairs, which have increased by 33 per cent, according to the Association of British Insurers. Courtesy car costs are increasing by around 30 per cent, while inflation has also pushed up the cost of personal injury claims.

Add to that an overall increase in claims frequency following the pandemic, and it could explain why car insurance costs are so high.

The cost of living crisis has seen insurance fraud explode. Motor insurance fraud was the most common type of opportunistic fraud referred to the City of London Police’s Insurance Fraud Enforcement Department between March 2022 and April 2023.

Car insurance is fast becoming one of the most expensive household bills, adding more financial pain at a time of high inflation and surging mortgage rates and rents.

If you’d like to call us to see if we can provide a better quote on your car insurance, please call us on 01256 463090 or visit our website Speak to an Insurance Expert | Bloomhill Insurance Solutions (bloomhills.co.uk).