Across the UK, home insurance claims fell significantly in 2020. The covid-19 pandemic has affected every corner of the UK economy, and the insurance market is no different.
However, for insurance businesses providing home insurance, this decrease has meant significant savings for some insurers.
Savings for insurance companies
By the end of the year, the drop in property insurance claims was 12.5%, according to HelloSafe. The insurance comparison service looked at home insurance claims over the first UK-wide lockdown period from March 23rd to May 31st.
While the insurance claims rate was down across the board, the data highlighted some significant potential savings for property insurance companies. For example, London saw a 19.32% drop in claims over the first lockdown period.
As a result, home insurers saved themselves an estimated £54.1 million in payouts. Other parts of the UK experienced similar drops. In Scotland, claims dropped by 18.25%, representing £30.7 million in savings for insurers.
The effect on different claim types
As well as looking at total home insurance claims, HelloSafe also looked at the specific types of claims being filed. According to their breakdown, the drop rate for each type of home insurance claim were as follows:
– Water damage: 12.99%
– Weather damage: 11.45%
– Fire damage: 11.77%
– Theft & burglary: 13.3%
– Accidental damage: 12.04%
– Domestic subsidence: 15.63%
– Other domestic claims: 12.04%
The overall decrease in home insurance claims during 2020 is not surprising; it mostly reflects the restrictive lockdown measures that were in place for much of the year. Other types of insurance, such as car and health insurance, saw similar depressions in the rate at which claims were filed. This is good news for insurers, who made fewer payouts than ever before in many cases. Whether these savings will be passed on to consumers remains to be seen. Landlords have also see a drop in claims on their landlord insurance policy.
The big question now for the industry is whether this trend will persist into 2021. The UK is expected to remain in lockdown until at least the end of March, so insurers are likely to see similar savings over this period. However, with vaccines rolling out, rates may return to normal relatively soon.