The causes behind the expensive High Net Worth premiums

Extreme weather affecting high net worth property

• Insurers have paid out a significant amount of money in claims related to storms, floods, heavy rain, and other weather-related damage. 
• For example, in 2024, the ABI reported that insurers paid out a record £585 million for weather-related damage to homes. 
• These payouts are not just for property damage; they also include claims for business interruption due to weather. 
• Climate breakdown has made storms more frequent and intense, contributing to higher claim payouts. 

• The increased payouts due to bad weather put pressure on insurance companies, leading to higher premiums. 
• The ABI has reported that home insurance premiums have risen in response to this increased risk. 
• For instance, the average combined home and contents premium rose by 19% in the second quarter of 2024 compared to the previous year, according to a BBC report. 
• This is Money reported that the typical combined buildings and contents insurance premium rose 3% from £396 per year between April and June 2024 to £407 between July and September. 

• Increased Frequency and Severity of Weather Events:

  Climate change is leading to more frequent and intense storms, floods, and other extreme weather events, resulting in higher claim payouts. 
• Inflation:

  Rising costs of materials and labour for repairs also contribute to higher claims and premiums. 

• Supply Chain Issues:

  Delays in receiving parts for repairs can also lead to increased costs and claims. 
• Reduced Competition:

  Aurum, which was the HNW home insurance business of Dual, ceased offering new business quotes and renewals effective March 1, 2024 Insurance Post reports.

  Aviva acquired AIG’s Azur business, after AIG issued an ultimatum to either find a buyer or be put into run-off Insurance Post reports.

  Allianz-owned Home and Legacy: This business was put into run-off after failing to find a buyer Insurance Post reports.

  Groves John Westrup: The HNW arm of Munich Re, Groves John Westrup, ceased writing new business on July 1, 2024, and was put into run-off Insurance Post reports.

  Horizon is also no longer trading new business, as of January 2024, Stanhope Insurance reports.

  Gable Holdings: Liechtenstein-based insurer Gable Holdings has exited high-net worth household lines of business offered through the Iprism Underwriting Agency mid-term Insurance Post reports