Norwich Union’s home insurance premiums are due to rise by 10 per cent today – a move expected to affect one in five homeowners.
The firm, the UK's largest household insurer, said that the hike was not linked to the recent floods and that the timing was coincidental, with a spokesman telling the BBC that Norwich Union had been assessing the levels of its premiums for some time.
But, the announcement came just a day after the insurer's parent company Aviva announced it was facing a £340m bill from recent flooding in Yorkshire and Gloucestershire and financial experts are not convinced by Norwich Union’s insistence that the hike and the cost of the recent flooding are not linked.
Debra Williams, Managing Director, Confused.com said: "This is the news everyone has been fearing. All insurers have been hit by a deluge of claims in recent weeks, and price hikes are inevitable.
"The insurance industry is hurting; an industry report published earlier this week predicts that property insurers alone will end the year paying out claims of around £3 billion.
"Norwich Union's premium gives the green light to others to follow - it will be interesting to see who does. We also anticipate that the insurance excess - the amount you must pay before your insurance cover kicks in - could rise as well as premiums.”
Graeme Trudgill, Technical Services Manager at the British Insurance Brokers’ Association says that Norwich Union and other insurers planning to increase their premiums should be very careful, because with insurance being such a competitive market, they could find themselves losing customers.
“This is a knee jerk reaction from some direct insurers and is somewhat opportunistic, “ he said. “The market for home insurance is very competitive. Consumers should be aware that they can obtain alternative quotes from an insurance broker who will advise them on finding the most appropriate and competitive policy.
“Consumers should not just focus on price, but should ensure that they are purchasing the cover which meets their needs.”
And Richard Mason, director of insurance at price comparison website moneysupermarket.com echoed BIBA’s comments saying that consumers now have the chance to shop around a get a good deal, advising people not to just put up with a hike.
He said: "This is a wake up call for homeowners who should ensure they shop around when they renew their policy. Otherwise, they could be in for a nasty surprise."
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