Important changes in the home claims market

  One of the effects of a challenging financial climate is changes in the home claims market. In 2022, UK construction costs rose to a 40-year high as we saw prices soar in raw materials, fuel and energy, and this has meant unprecedented challenges for insurers. There are shortages in labour and materials, skilled workers are asking for higher salaries and the war in Ukraine continues to cause huge supply chain issues. All these shortages have meant delays in home repairs and, for bigger claims, homeowners having to be put up in alternative accommodation longer, meaning more cost to the insurer – and, subsequently, to policyholders. As one example, a glazing repair can currently result in a 20-week wait, following a simple claim.  

Other delays include:

- Accidental damage: up to 25 days - Fire: up to 60 days - Water: up to 70 days - Subsidence: up to 120 days  

Subsidence

  There have been recent concerns about a rise in subsidence claims, but these have proved to be largely unfounded. Optimism surrounds the prevalence of new builds, as they are better equipped to guard against subsidence, but some insurers are adjusting their risk according to location. Subsidence claims on the increase  

Cash settlements

  Some customers are opting for cash settlements because of delays in repairs, but difficulties in finding reputable builders to carry out those repairs, and contractors charging 12-20% more than an insurer’s, means that, increasingly, cash settlement offers from insurers are being refused. Conversely, this holds risk, as customers complain about insurers’ contractors not always fulfilling the work in reasonable time and at reasonable cost. Contents claims settled for cash are between 50-80% of the full value.  

Environmental matters

  Climate change remains an important concern for insurers and policyholders alike. Green building materials can be up to 20% more expensive than less-environmentally friendly equivalents, mostly due to expensive manufacturing processes. New for 2023 are FCA obligations on climate-related disclosures, plus potential new rules on ‘greenwashing’.  

Fraud

  With rising inflation comes an increase in fraud, and insurers are using technology to expediate the claims process, with some introducing ‘pre-photographs’ at the commencement of a policy or using video technology through Apps to assess a claim or scan documents for validity. Insurers are also sharing information between them about customer’ behaviours and training employees specifically in fraud, and document analysis. Aviva for example are investigating 30,000 home fraud insurance claims alone.  

Increased jewellery theft claims

  There is a rising criminal trend of thefts/muggings targeting watches that are being worn and we have seen several high-profile celebrities fall foul to watch robbers, including Songs of Praise presenter Aled Jones, who was robbed on July 7 in Chiswick where he had a £17,000 Rolex stolen. Independent watch robbers article Aled Jones £17,000 Roles stolen  

Claims

  A rise in inflation also means a rise in the number of claims, with some claims’ values being exaggerated by customers.  

The insurer’s blueprint

  Insurers are focusing on: - Making the life cycle of a claim shorter - Exploring alternative accommodation options - Adhering to new regulations like the FCA’s ‘value measures’ - Managing costs - Reviewing their control measures, supplier’ contracts (and materials) - Exploring alternatives to repairs - Ensuring claims, actuarial, pricing and underwriting are joined up - Educating policyholders in understand claims’ processes, who to contact first and which documents to keep  

How can Ascend help?

Ascend understands the home claims market in detail and its current issues and fluctuations. Matthew Collins, Managing Director of Ascend, says, “It’s a tricky time for home claims, for both clients and insurers, but Ascend is across the entire landscape and its changes, and has access to all the data in the market, so we can respond nimbly to our clients’ concerns and needs.”

Let our experienced team answer any questions you might have!

contact Ascend today on 01245 449060.