Daily Insurance Industry News
 
 
Daily Insurance Industry News
Wednesday 22nd of May 2019
October 22, 2010

Home insurers in danger of “race to the bottom” on premiums

by Gill Montia

Story link: 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.”

 

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