Home insurance premiums are set to increase this year, despite the cost of the average quote falling slightly during the first quarter of 2017.
Research conducted by the AA suggests the average cost of a buildings and contents policy fell by 0.1% in the three months to 31 March 2017, and now stands at £156.12 a year.
Over a 12 month period the cost of the average policy increased by 0.5%, something which the AA credits to a relatively storm-free winter period.
However, the insurer has warned that the next increase to insurance premium tax (IPT) in June will result in premiums rising. IPT has risen four times since October 2015, with critics calling this a tax increase by stealth.
“Insurance premium tax increased to 10% from last October and will rise again to 12% in June 2017 and we expect a 2% inflationary increase for policies being taken out or renewed from the beginning of June,” says Michael Lloyd, the AA’s insurance director.
But he says that insurers must now declare customer’s previous premium on renewal, something which will likely boost competition in the sector.
“I believe this will only encourage more people to change insurance cover more often,” he says. Although he warns: “That in turn is likely to discourage insurance companies from offering introductory discounts if they don’t expect to renew business after the first year.”
Moneywise reported earlier this week on how the cost of a comprehensive car insurance premium has risen by 12.9% in the last year, with motorists set to face further increases this year.