Insurance companies are using global warming to justify a huge increase in home coverage premiums, even if homeowners don’t live near rivers or the ocean and have never filed a claim for storm damage.
In some cases, households have seen the prices of building and contents policies triple, citing “changing weather patterns” as the reason for skyrocketing costs.
Online boutique owner Helena Adams, 66, lives in a three-bedroom house worth £575,000 in Harrow, north-west London, with the River Thames eight miles away.
He couldn’t believe his eyes when he opened a letter from insurer Esure in July and read the words “following changes in weather patterns, we have reviewed the risk associated with your property”, as an explanation for increasing his home insurance from £ 291 to £687.
Helena was understandably taken aback. She says: ‘About 15 years ago the radiator valve in a living room leaked onto the carpet and we made a claim. This is the closest we’ve had to flood or storm damage.’
Bill storm: Insurance companies are raising the cost of home insurance premiums due to ‘changing weather patterns’
Outraged, Helena canceled her Esure policy and signed a comparable deal with MBNA Bank for £218 a year, £73 less than she had paid with Esure the previous year.
Freelance journalist Rosie Murray-West was also told in the summer that, as a result of changing weather patterns, her premiums with Esure would rise from £374 a year to £1,186.
Like Helena, Rosie doesn’t live on the storm-battered Channel Islands, near floodplains or on the edge of a cliff.
Rather, their four-bedroom property is on a hilltop in south London and five miles from the River Thames.
She says: ‘They sent me a standard letter with no explanation for the unjustifiable increase in prices other than blaming the weather.
How foolish to use global warming as an excuse to increase premiums. I now pay £400 a year with competitor More Than, about the same cost as before.’
Barbara Penhallow saw her home insurance with Swiftcover, part of insurance giant Axa, also triple when her buildings and contents policy came up for renewal in June.
The 69-year-old retired accounting clerk from Croydon, south London, first heard about the walk when she was sent an email titled “Sit back and relax”.
But reading that his premiums for his £500,000 three-bedroom Edwardian terraced house would rise from £178 to £542 had the opposite effect.
The email also included the message: ‘Good news! We have ensured that your renewal price is the same or even better than if you were a new customer with a comparable quote.’
Perplexed, Barbara immediately called Swiftcover and was given no excuse for the increase or a better price.
However, when he called parent company Axa, they admitted that a “wide variety of factors” were taken into account when calculating annual premiums, including “heat waves, floods, unexpected summer storms and cold snaps.”
However, nothing had changed in Barbara’s home to justify the £364 increase and she has never made any claim.
‘I have seen the effects of global warming first-hand – on a recent holiday in Mauritius, where it was possible to see that the sea level had risen almost a foot. But the nearest coast to my house is about 50 miles away, in Brighton.
“There has been a lot of rain recently, but this cannot be used as an excuse to increase charges.”
Coverage costs: Home insurance quotes have increased on average almost 25 percent over the 12 months to June.
He adds: ‘The problem is that insurers treat us like fools and expect us to automatically renew and swallow any old excuse for increases.
But when I saw what they were doing, I faltered and switched to More Than, where I’m now paying £242 for an almost identical policy.’
Research firm Consumer Intelligence has found that home insurance quotes rose on average nearly 26 percent over the 12 months through July.
He believes that inflation is one of the most important factors, affecting the price of building materials and labor for home repairs.
But the company also points to the “impact of hotter summers and wetter winters increasing flood and subsidence claims.”
The average cost of home insurance in Britain now stands at £315, according to trade body the Association of British Insurers.
The trade body says insurers paid out £473m to 170,000 customers in February for storm-damaged homes, and that the June heatwave could lead to a “significant increase in subsidence claims”. Additionally, he says higher costs for general repair bills are driving up premiums.
James Daley of consumer website Fairer Finance says: “Global warming has been known for several decades and weather events related to it should already be factored into premiums.”
He believes the real reason home insurance premiums are rising has little to do with the climate.
It is the result of rising claims costs and new consumer rights rules introduced early last year by the Financial Conduct Authority aimed at stopping insurers from exploiting loyal policyholders with higher premiums than they new clients pay.
The regulator’s intervention was well-intentioned, but it has driven up premiums across the board.
Daley also says consumer rights regulations haven’t helped. They are now demanding that insurers be more open with customers about why premiums are rising. Some insurers are using changing weather-related factors to explain the increases.
“Whatever reason an insurer gives for increasing the premium,” he adds, “the customer should not take it at face value.” You should always compare prices.’
This is the sister title of Money. Money Mail contacted a dozen major home insurers to ask how they can justify using the weather to increase prices.
Most (including Esure, Churchill, NFU Mutual, Direct Line, Hastings Direct and Endsleigh) ignored our request for answers or said they “couldn’t help”.
Aviva said: ‘We constantly analyze data to understand the latest weather patterns and monitor to predict future risks.
“Many factors must be taken into account when calculating costs, such as the number of claims, increasingly expensive repairs and also inclement weather.”
A spokesman for the admiral said: ‘We are aware of the potential impact that climate change may have on the frequency and severity of weather events in the future.
“Loss experience and the models used to predict future weather, such as floods and storms, are factored into our pricing methodology to try to accurately reflect risk.”
Axa said: “Climate change is increasing the number and severity of adverse weather events, leading to an increase in the frequency and severity of claims.”
Halifax said: ‘We have an expert in-house climate monitoring team who regularly review the climate and adjust risk models to take account of change.
We do not change prices due to natural variation from year to year, but instead reflect the underlying trend of increased risk that global warming has created.’
RSA Insurance said: “The frequency and severity of weather events has increased in recent years and we are closely monitoring this.”
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