23 January 2024
As we enter 2024, we felt it would be useful to provide you with an update on the current trends in the insurance market. As a specialist insurance consultant, we want to bring you up to speed on what you may expect with your renewal terms and reasons for this in the year ahead.
Insurance prices, like most other sectors of our economy, are unfortunately currently on the rise for both home and motor insurance.
There are various factors at play that are driving up insurers' claims and operational costs, causing premiums to rise as aresult. A few of these include:
Inflation
The price of a brick or a bumper is much higher in 2024 than they were in the recent years, meaning houses are more expensive to rebuild and cars are more expensive to repair as well.
Repair Worker Shortage and the Cost of Labour
There was a mass migration of construction labour post Brexit and Covid, with the Office of National Statistics suggesting there are 244,000 fewer construction workers in the UK in 2023 than 3 years before (Source: Homebuilding). This shortage, coupled with general inflationary factors, has caused labour rates to increase in both the Construction and Vehicle Repair sectors.
Worldwide Materials Supply Chain Delays and Backlogs
These issues have been created by Covid lockdowns and further exacerbated by on-going international conflicts. The cost of materials and parts have increased quite substantially as a result.
Theft of Motor Vehicle Claims
It has been well publicised that certain high value keyless entry vehicles have seen a rise in thefts with them being stolen to order, shipped abroad or stripped for parts in UK chop-shops. Insurance premiums for these type of vehicles have seen a large increase as a result.
Climate Change - Storm and Flood Damage
In recent years the severity and frequency of severe storms that have caused flooding has alsobeen well publicised. Claims costs have increased as a result and insurers are also becoming more selective on the areas of the country they will offer cover.
As a result of these known issues, insurers' claims costs have risen to such an extent that several well known insurers have decided to pull products out of the market. This restriction in market capacity, combined with rising costs, results in insurance premium increases for customers as insurers who remain attempt to balance their books. In insurance terms we call this a ‘’hard market’’.
What does 2024 hold?
Looking at 2024 we can expect more of the same in the short-term as the economy continues to battle against inflation and market uncertainly. The good news though is that hard insurance markets come but do eventually go. Sometimes new insurer entrants also emerge, creating more competition and prices stabalise once again.
In the meantime, as insurance brokers we meet regularly with our insurer partners to ensure our Verlingue clients continue to be provided with the best possible terms. We will also proactively review our clients’ policies at renewal to establish if their product remains the most appropriate for them individually.
Whilst 2024 may result in a difficult journey, we will be there to guide our clients through these difficult and oftencomplex times in the best way possible.
Contact us today to speak with one of our Private Client specialists to find out how we can assist you with your personal insurance covers.
Jon Bethell
Head of Private Clients
E: Jon.Bethell@verlingue.co.uk