Defaqto Home Insurance Report

by Gill Montia

Story link: Defaqto Home Insurance Report

Defaqto, the financial research company, has published a report indicating that home insurers have been benefiting from strong economic growth combined with benign weather conditions. As a result new providers have entered the market, making it increasingly competitive.
The report suggests that because growing numbers of consumers are comparing policies via web sites, the sector is becoming fiercely competitive on price, with some insurers offering discounts or cash back incentives to new customers, without any reduction in the cover offered.

Home insurance currently offers a choice of approximately 200 standard polices and is therefore a relatively easy market to enter. Defaqto believes that the market is becoming oversupplied and that premium increases have not kept up with inflation over the past 10 years. In the current conditions the sector remains attractive to insurers but there is a risk that adverse weather conditions could leave some insurers exposed, especially those operating on price alone.

Defaqto expects to see a number of major changes in the home insurance market by 2010. It believes that brokers with no Internet presence will lose business, that additional retail brands will enter the market and that more price comparison websites will be launched. As a result, some insurers are expected to move into the higher value end of the market, whilst also using green issues to market and sell their policies.