Home Insurance to rise by 20%: Why pay for Insurance at all?

Home Insurance to rise by 20%: Why pay for Insurance at all?

Home Insurance to rise by 20%: Why pay for Insurance at all?The devastating floods before Christmas and the big freeze in January saw insurance companies’ payout a massive €541 million; the payout exceeded the total of all serious weather events over the last decade, which stood at €358m. The Irish Insurance Federation (IIF) agreed that homeowners could now face at least at 20% increase, if … not more, in their premiums as the industry seeks to absorb the half-billion euro cost of extreme weather damage.

But why pay this increase? Or why pay for home insurance at all?

Insurance is about protecting against risk but it has been reported that those affected by the recent floods and made a claim did not received the amount they were covered for. They also found it impossible to switch to another insurer and when they could get cover they were forced to accept an excess. It is also reported that half the number of insurance companies refuse to cover householders who have made a previous home insurance claim.

So while rising premiums for some may be a problem, the possibility of withdrawing flood cover in a growing number of areas or being refused cover is inevitable for others.

Have Your Say: Home Insurance: Why pay for it?

  1. Should we pay for home insurance if we will not be given the cover we paid for?
  2. Should we, the homeowner be penalised for making a claim due to extreme weather conditions? After all insurance is about protecting against risk?
There are 14 comments for this article
  1. soso at 10:13 am

    my insurance cover just went up by 66% – and me living on a hill away from every flood plain, and no claims. getcover.ie were the culprits. But they were still the best price for renewal. Looks like orchestrated gouging to me…

  2. Yvonne at 7:55 pm

    20%!!!

    My house insurance was €294 last year 2009. My quote today from the same company – 123.ie – with exactly the same cover was €664. 20% increase this does not make! (Same company, same terms, €260 for 2008).

    I shopped around and got it for €406 from AA. Still a huge increase!

    I feel very agreived because I have no choice but to put up with this extortion. I feel I have to protect my property with house insurance.

    I agree with Colm about the no claims bonus style system or similar. My heart goes out to the people affected by flood damage but I really don’t think it is in the least bit fair that the insurance companies think they can use this to fleece the rest of us.

    I am a careful, responsible owner of my own home. I have not claimed ever. I do not abuse the system like some people, as Colm has already given example of above……..so shy should I have to pay extra?

  3. Colm at 9:18 am

    My insurance quote increased by 300 euro. I shopped around and got the increase down to 50 euro. I have never made a claim. It’s a new house and the pipes etc are all lagged so I wasn’t impacted by the cold weather. I live on a hill so if I get flooded the whole country is in deap trouble.

    So why exactly am I paying more? I asked if there was such a thing as a no claims bonus and one broker said they were in the process of introducing it but right now it is all shared risk.

    We need to bring in a system similar to car insurance. Safe home owners pay less than more risky home owners. A lot of claims are small but add up. If someone wants a new TV then just get your toddler to pull it off it’s stand and hey presto your insurance covers it with no impact on your insurance next year. That is wrong.

    Also the insurance companies need to be more vigerous in objecting to planning on flood planes (although the horse has bolted to some degree on that). They should also pursue state bodies for damages. In Cork the ESB need to be held to account for the majority of the flooding. In Clonmel the council built a massive water treatment plant on a flood plane outside the town which created a bottleneck and pushed the water back into the town. At the moment they are building walls around the town which will just push the water into new areas which have never flooded. Insurance companies have the political contacts and the financial power to fight stupid decisions like these.

  4. John at 9:05 pm

    The flooding that occurred this winter, and frost damage more recently, were exceptional. In other words they occur infrequently, and history bears this out. How long is it since we last had such severe occurrences, say ten, maybe fifteen years or more. When they occur they give rise to huge costs for the individual householder, and can completely upset a families financial circumstances. Therefore we insure against such occurrences. The insurer looks at the risk and decides on the premium in competition with other insurance companies. But the whole premise of this mechanism is that the insurer makes nice profits when the flood or frost damage doesn’t materialise and builds a substantial fund to finance the payouts when required. Additionally insurance companies lay off the risk among one another, so that company profits are protected.
    The problem now is that the insurance companies have become so accustomed to the fat profits that when real costs arise they think the are entitled to continue to grow these fat profits and resultant bonuses.
    It is time our sick government and regulators who are in a cosy cartel with these insurance companies and sit on one anothers boards are taken to task. This must start with each of us making contact with our TDs. Get on their backs. Demand action. They will ignore the issue unless there big numbers demanding action. Get on to Joe Duffy.
    Why should all the insurance companies be coming up with this nice round number of 20%? Is it not clear evidence of a cartel in operation. If we let this happen it will happen. It is up to us because our regulators and government will not address it.

  5. Sam at 11:35 pm

    We should all realize that banks and insurance companies are a cartel of legalized criminals. Governments are powerless to police them and I would like to be able to insure my pension fund against a crash in the economy – any insurance companies out there that can give me a quote? Suckers we are and suckers we shall remain. Thankfully our trust is in God not man made institutions

  6. Ruth at 9:03 pm

    This year my home insurance has gone from €231 to €402.I have never made a claim. Excess has increased from €i25 to €250. This is so unfair and I can’t afford to pay this.

  7. Cedric aussi at 7:44 pm

    JPL said it all. The one question that remains is who is keeping an eye on insurance companies, and at what level (national, european, worldwide) just as the same should occur for the banking industry?

    I mean, how can they be allowed to throw a 20% premium increase without any government body scrutinising the justifications for this hike?

    Let’s also keep in mind that if the gutters were cleaned regularly, some of the flooding would not have been as bad as it actually was. Leaves fall off trees every year roughly in … fall. It also happens that it usually rains during that period. And every year, you see gutters full of leaves, washed by rain to end up blocking the drains. We used to employ people for this job, but as with everything, we made budget cuts. Could there be a correlation?

    To reply to Vincent about a possible government handout. It seems to me that a lot of people seem to disconnect money the government dishes out and taxes. Any money the government pays out comes straight out of your pocket, so with the government already bankrupt as it is, and tax increases coming right left and centre, let’s be a bit more realistic than suggesting the nation has to bail out the insurance industry because they had one bad year. They knew the risks of insuring people in flood areas, and had calculated the potential losses long before they occurred.

  8. Sean at 3:24 pm

    People should get the payment they paid for, nothing more, but certainly nothing less and if necessary the government/regulator should intervene to ensure this happens.

    But we all shouldn’t have to pay more to compensate for those that have suffered flooding. Insurance is supposed to be about risk, if I live in an area that hasn’t flooded (and I believe never will), then how has my risk increased ?

    Many of the flood victims are unfortunate in being flooded by exceptional circumstances, but others bought houses in low lying areas, on river flood plains or in areas previously prone to flooding. I wouldn’t be happy about another situation developing whereby I end up having to pay more to compensate for the poor decisions of others.

  9. Vincent Mockler at 3:02 pm

    The answer to the first question. Of course we should only pay for what we are covered for.If they are not prepared to give us the cover we require, they should be dealing in insurance.
    The weather is an act of God of which none of us have control over. The insurance companies should deal with this by an increase in the premiums of those who make a claim or maybe a help out from the Government.
    Vincent.

  10. JPL at 2:10 pm

    It is farcical that the insurance companies are justifying a 20% increase in premiums on the basis of losses incurred in the last year in Ireland.The fact is that like any prudent ‘Bookie’ the insurance companies lay off or re-insure themselves against risk as we all learned to our cost when AIG among others had to be rescued by the FED with a trickle down effect to all policy holders worldwide.In addition most if not all of the insurance companies operating in Ireland are part of or owned by Multinational insurance groups with income streams from a wide variety of different populations.it should be incumbent on these companies to take a global view or at the very least an EU wide view on total income and profits and not be allowed to fleece a particular country which suffered a particular calamity while they typically raked it in in other countries.Many costs are levied on the Irish population are justified on the basis of our being members of the EU .We should equally be allowed to benefit from being part of the EU by setting off losses against profits made in the EU as a whole and not by treating each country as an individual cost/profit center.National Governments via their respective ombudsmen should coordinate this type of approach and not allow companies to take their current approach.
    I also recall an insurance increase being justified some time ago on the basis of losses incurred with the twin tower attack and the New Orleans disaster which again demonstrates the integrated nature of the financial services industry which we are only too aware of given the current melt down in financial services generally.It appears to me that this 29% hike is more about an attempt to redress losses incurred in the financial meltdown than the losses incurred in Ireland

  11. grainne Koberl at 1:21 pm

    No we should not be paying for home insurance if we are not being properly covered…and we should definitely not be paying 20% more due to claims other people have to make….the insurance companies are cleaning up from people who never make claims so why should we all suffer.

  12. Flex at 12:25 pm

    Why should I pay more for my house insurance when we’re in a deflationary economy and I’ve never made a claim? And it appears that half of all claims went unpaid and the rest (after an excess was paid) did not receive the full amount???

    I didn’t buy a house on a floodplain so why should I pay more??

    It’s all about Profit maintenance….scum just like the banks……………..

  13. Des Lalor at 12:23 pm

    The main reason for insurance is the Liability cover the policy provides. We insure against possibilities and not probabilities. Des

  14. Cedric at 12:14 pm

    Should we pay for home insurance if we will not be given the cover we paid for?
    This is the wrong question – we should just be given what we pay for

    Should we, the homeowner be penalised for making a claim due to extreme weather conditions? After all insurance is about protecting against risk?
    Yes of course, if you crash your car during heavy rain you pay a premium penalty – the same should be done with home insurance regardless of what or whom is to blame. But the penalty should be simply an increase in premium where the insurance companies can reclaim their loss over time. This is what’s supposed to be done.

    The issue here is the insurance companies not covering what’s been paid for and then on one bad year changing the rules. Cover the costs, it’ll be re-cooped over time.

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