Cost of materials and labour
The cost of building materials and labour have increased sharply in the last couple of years, due to several factors, including:
- Supply chain issues. The COVID-19 pandemic disrupted global supply chains, making it more difficult and expensive to obtain building materials. This created a backlog for housing projects, materials and repairs.
- Increased demand for building materials and shorter supply have led to a major increase in prices.
- There is a labour shortage of skilled workers in the construction industry. This means facing a shortage of skilled workers, which is driving up wages and costs.
There are many more factors in the supply chain including conflicts, HGV driver shortages, and the cost of energy – all compounding to raise costs even further.
Severe weather events, such as storms and floods are becoming more common, leading to an increase in claims. In addition, there has been an increase in the number of ‘escape of water’ and burst pipe claims, which often occur in freezing weather.
The resultant damage has caused billions of pounds worth of damage to homes and led to an increase in home insurance claims.
It’s not just winter weather either, subsidence payouts were reportedly up 21% as a result of the record-breaking summer heatwave.
Record inflation has resulted in increases across the board, causing insurance premiums to also increase.
Given all of these factors, we’d highly suggest reviewing your level of cover to make sure it is still appropriate. To find out more, read our blog below.
Insurers are faced with the challenge of balancing their books amidst mounting claims, which means they need to keep premiums at an appropriate level.
These cost factors influence the workings of home insurance. Understanding how home insurance works can help you navigate through these rising premiums.
In January 2022, the Financial Conduct Authority (FCA) stopped insurers from offering new customers lower prices than existing customers for the same cover. This was designed to stop some providers from taking advantage of loyal customers through significant increases at renewal, but has meant that those who shop around won’t always find the dirt-cheap deals they were used to.