Home Insurance Prices Rising Sharply

Consumers are being hit with a dramatic rise in the cost of Home insurance this year. Prices are rising by 20% and more in some areas. We are being told prices are falling in the Irish economy, so what on Earth is happening?

Prices did fall for 4 consecutive years and this could not continue forever. In fact when you allow for the affect of inflation home insurance prices will still be lower in real terms after this year’s price increases than they were last year. But that is not much consolation when you are looking at a household bill that is 20% higher than the last time it hit your doormat 12 months ago.

The insurance industry gives a number of reasons why this is happening. The most significant of these is investment income. The major international insurers and re-insurers are obliged to maintain large sums of money from premium income as reserves for solvency requirements. Those large reserves are invested in global markets and that generates a return. Up until 2007 or 2008 those returns were very healthy as major profits were made in the investment market. That in turn drove competition for premiums and drove down prices. Since the downturn those profits are gone.

Ireland is part of the global insurance market and is affected by this, but there are also reasons for price rises that are much closer to home. These include:

Home Fittings More Expensive: The average Irish home now has more and higher value contents than it used to. From fitted kitchens and bathrooms to plasma screens, the investments that Irish people made in their homes in recent years become more expensive to repair when there is a claim.
Weather: We did well for a few years in that there was no very severe weather experienced in Ireland for several years prior to 2008. Prices fell during that period because there wer fewer weather related claims. But major flooding took place in Ireland in August 2008 and extremely cold weather in January 2009 led to a huge number of claims for burst pipes and other types of property damage. This suggests that insurance companies need to factor more frequent severe weather into their prices for the future to ensure they have enough money to pay for any more catastrophic events that might happen.
Fraudulent or Exaggerated Claims: This is probably not as big an issue for Home insurance as it is for motor insurance but it is still a factor. The numbers of claims increase during a recession – a phenomenon that is true worldwide. There is also the temptation to claim for more than was damaged or lost, and that temptation is obviously greater on average in tighter economic times.
Home Repair Costs: Many home owners are deferring routine maintenance on their houses such as clearing drains and fixing gutters. This leads to larger and more expensive claims when there are stormy conditions.
Government Levy: Last but not least, the Government has made it worse. The Government levy on home insurance policies will increase to 3% on all policies from 1st July.

None of these factors in isolation would add up to the hefty increases that we are seeing, but the combination is driving prices up sharply. This will affect all Home Insurance policies irrespective on the provider but the consumer should still keep their eyes open and shop around. Remember that the cheapest prices does not necessary mean the best cover, so it is worth examining the policy benefits to make sure that you are getting what you want at the best price available.

The AA offers Home Insurance, along with Motor Insurance, Travel Insurance, AA Membership and other services. If you want to put us to the test you can get a Home Insurance quote online by clicking here. If your Home Insurance is not due at the moment, tell us what month it falls due and we will contact you then. Email your name, address and renewal month to

AA Ireland, 56 Drury Street, Dublin 2, Ireland. | Tel: +353 (0)1 617 9999 | Fax: +353 (0)1 617 9900 | Email: aa@aaireland.ie