Landlord Insurance in the UK – Key Trends and Opportunities to 2017

Date: 2015-09

“The UK landlord insurance category is estimated to have generated GBP2.51 billion in gross written premiums in 2012, and accounted for 7.3% of the country’s non-life insurance segment. Landlord policies cover the financial risks related to renting out a residential or commercial property, including damage to buildings or contents, loss of rent and public liability.
Growth in the category was maintained during the recession and economic weakness during 2008–2011, as a sluggish housing market triggered an increase in properties occupied on a rental basis. This signaled the reversal of a post-war trend towards property ownership, with close to 35% of properties rented through private or social housing landlords in 2012. This marked a five percentage-point increase from 2000 alone.

In addition to the subdued economic backdrop fueling a shift towards rented accommodation, it is also likely to have increased demand for landlord insurance due to greater risk aversion, a larger number of homeowners choosing to rent out property rather than sell at reduced prices, unemployment stoking a rise in the number of tenants in rent arrears, pessimistic businesses reducing their commitment to long commercial leases, and a rise in adverse weather-related incidents.

Opportunities exist to develop the category during the forecast period. Insurer-led market surveys have found that customers are under-informed about the insurance cover required for landlords, with up to a quarter of residential landlords opting to purchase a standard home insurance policy. Switching policyholders to appropriate landlord insurance policies presents a large growth potential for premiums in the category. Looser credit conditions and an increase in buy-to-let lending suggest additional favorable forces.

The outlook for the availability of flood insurance is clouded by uncertainty. Following the shift from the Statement of Principles to the industry and government Flood Re proposal, it has been confirmed that affordable flooding insurance will only be guaranteed for resident homeowners. Consequently, insurance premiums for landlords of both residential and commercial property are expected to face significant upside pressure over the forecast period. Industry associations estimate that the number of properties affected could be as high as 1 million.


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