Home insurers in danger of “race to the bottom” on premiums
The UK home insurance industry is in good shape but faces a number of challenges and a period of transition, research by Defaqto has indicated.
In a new report, the financial services analyst suggests that uncertain economic conditions and changes within the sector have combined to create a difficult climate for insurers.
Significantly, the number of providers in the home insurance market has increased by 73% since 2004, with the rise driven by comparison websites and major retail brands.
As a result, providers are moving away from “one size fits all” products to a more targeted approach.
However, there are also signs that the industry has started to move towards a focus on price, and away from the cover and benefits offered by policies.
Defaqto’s report concludes that insurers will be competing in a difficult environment over the coming years, and that getting the approach and balance right will be a challenge.
The firm’s insight analyst for General Insurance, Mike Powell, says: “We believe there are long-term implications for insurers, who may need to consider how they restrict premiums while simultaneously lowering the cost of acquiring and retaining new customers.”
He adds: “In addition, there are increasing signs that a race to the bottom with regards to premiums could emerge – and this could be detrimental to consumers and the industry as a whole.”
Category: Home Insurance News, Insurance News
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