…is the estimated amount of money saved by the home insurance industry as a consequence of Covid-19 lockdown, as the number of claims dramatically felt down.
Forced lockdown, permanent remote working, principal residences deserted overnight: the measures taken to fight against Covid-19 have transformed Britons’ relationship to housing, leading to a drop in home accidents. Although insurance companies have been decreasingly solicited in the past few weeks, home insurance premiums have still not been cut down. We modeled the decrease in accidents rates observed during the pandemic.
Have a look at the exclusive figures on our interactive map and discover which regions were most spared by burglaries since the beginning of lockdown.
Drop in home insurance payouts during lockdown
Savings made by home insurers during lockdown
That’s what the numbers show :
Lockdown: dramatic decline in home insurance claims
The almost permanent presence of British citizens in their home, as well as of their neighbours, have helped containing the extent of accidents. Restrained by lockdown, residential burglaries decreased significantly in some parts of the UK. Indeed, the number of burglaries dropped by 37% during lockdown, from more than 800 daily cases in the UK to an average of around 500 these past few weeks. Consequently, insurers were able to save 25.5 million pounds on the sole “theft” warranty of home insurance contracts.
But this decrease in claims is not restricted to burglaries, as other categories (fire, water damage) also recorded a clear decline. Confined in their homes, Britons could indeed react rapidly in case of accident and limit the aggravation of potential damages (a fire spreading, a leak drawing out…). They were also able to carry out maintenance work and home renovations. Preventive actions which undoubtedly contributed to the avoidance of a certain number of claims.
Decline in the number of claims: a bargain for insurers?
In 2018, the amount paid out in home insurance was estimated at £2.9 billion – according to a nationwide organization representing the insurance sector. According to our estimates, nearly £102 million were saved by insurers during the Covid-19 pandemic.
At Hello-Safe.co.uk, we think that lockdown might have had quite an impact on home insurance payouts, mainly thanks to :
- Small maintenance and renovation works carried out in homes
- The vigilance of policyholders, who have established links
- More remote working, which results in a more regular presence at home (80% of burglaries take place during the day according to the Office for National Statistics).
Lockdown could have a lasting impact on insurers and policyholders
From our perspective, these new habits will have a significant impact on the number of claims, in particular concerning fires and burglaries. Enough for insurance companies to make significant savings, since fewer claims means less payouts.
Home insurance premiums in the UK have been constantly increasing ( 27% increase over the last 3 years according to Money Super Market) and represent a significant expense in households’ budget. If insurers are within their rights as to the savings made, one can wonder about the role they have to play amidst this crisis.
Given the spontaneous movements of solidarity on the part of certain car insurers – reducing insurance premiums following the considerable drop in motor claims – , it remains to be seen whether similar measures will be put in place for home insurance. It would make sense for premiums to fall in the coming years, or at least to stagnate, since they are currently only affected by the increased risk of climatic events.
Antoine Fruchard, insurance expert and CEO at Hello-Safe.co.uk
“It is not a surprise to see that home insurance claims have decreased in the significant way, with much Britons stuck at home during the lockdown period. Indeed, as we observed with car or health insurance products, the payouts made by home insurers have gone down. However, until now, no company have decided to lower the premiums on home insurance. This is a questionable position, when the impact of the economic crisis is just starting to strike most of the British households, and could last for years. Moreover, many workers will now make the decision to work from home, fully or partially. For those remote workers, the insurers will surely have to adapt and propose new solutions”.
We based our study on public information provided by reliable data-providers, both public and private. For further information on our editorial guidelines please click here.
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