6 reasons why property insurance premiums are rising

Property owners and landlords are currently facing a perfect storm. Rising inflation, the changing nature of risk, and a host of other economic factors are driving property insurance premiums higher than they’ve been in more than a decade.

Here we look at these factors in more detail and learn why now is the time to make sure your property valuation is up to date.


Why are property insurance premiums increasing?

1 Rising inflation

In recent months there’s been increasing inflationary pressure on the economy. According to the Consumer Prices Index, inflation rose by 5.5% in the 12 months to January 2021. This is the highest level in more than ten years, and a figure that increased sharply towards the end of 2021.

2 Cost of materials and labour

The overall cost of materials is also rising. Figures from the BCIS Materials Cost Index show a 20.3% rise between November 2020 and November 2021 – a 40-year high. Add to that the chronic labour shortage caused by Brexit and Covid-19 (1.3 million foreign-born workers have left the UK since the start of the pandemic) and we’re seeing supply chains in crisis. According to data from the CII, UK insurers are looking at an increase of 9.6% to cover rebuild cost inflation.

3 Climate change

Climate change means the UK is experiencing more unpredictable and severe weather events, most recently, three storms in quick succession in early 2022. PwC estimated insurance losses for Storm Eunice alone (February 2022) of £200-£350 million. When insurers are unable to predict future risks, reinsurance treaties prove harder to negotiate, with the costs being passed on to property owners.

4 Changing methods of construction and design

The evolution of construction methods is also playing a role. Modern buildings are less able to withstand fires, floods and storms. Plus, the trend for open-plan living and working makes it harder to contain fires when they do break out. Something to consider if you’re planning renovations or refurbishments in the near future.

5 The pandemic

Since the COVID-19 pandemic hit the UK in 2020 we’ve seen rising inflation, severe business interruption, and increased insurance claims. Estimates suggest it has cost the insurance industry in excess of £200 billion. With such high pay-outs, UK insurers have had no choice but to buckle up and watch rates harden.

6 Unsustainable loss ratios

Finally, property insurance premiums have been artificially low for many years. As a result, insurers’ combined operating ratios often exceed 100%, meaning the cost of providing property cover has been higher for insurers than the premium received. Insurers are now experiencing an increase in the number of claims being made and the cost of those claims.


The impact on property owners and landlords

These soaring rebuild costs have meant the majority of commercial properties and property portfolios are now underinsured. That means there are a lot of vulnerable properties across the UK, from commercial spaces to conversions to new builds. For insurance to be effective, properties need to be insured for the amount it would cost to rebuild them. But the rise in construction costs means that many buildings are now covered for just a percentage of that – leaving many owners and landlords out of pocket if they had to make a claim.

The concern among property owners and landlords is that these higher rebuild costs will lead to higher premiums. However, the increase in insurance premiums will be trivial compared to the potential insurance deficit if a claim has to be made.


How to find a better rate

If you’re a property owner, it’s important that you take action now to find the most competitive property or landlords insurance premiums to protect your investment.

Here at Stride, we’re working with all our customers to help them navigate these unprecedented times and ensure they secure tailored cover at the right price.

Get in touch to request a new quote and find out how we can help with your landlords insurance or property portfolio insurance.


Contact our insurance experts https://stride.co.uk/contact-us/ or call 0800 840 6699 today.



Stride Ltd is Registered in England No. 01122247.  Registered Office: Affinity House, Bindon Road, Taunton, Somerset TA2 6AA. Calls may be cdrecorded for use in quality management, training and customer support.

Published: 11th April 2022 (Stride Ltd)
Need help finding the exact insurance for you? Get insured
Need help finding the exact insurance for you? Get insured