They've got you covered

Insurance claims are at record lows, but try telling insurers, writes Nic Cicutti

Everyone knows insurers put every possible obstacle in the way of claimants in order not to have to pay them a penny. Everyone knows, it seems, except the insurers themselves. They claim to provide a vitally useful social service and can cite figures to prove it.

Figures released recently show that household disasters - such as burglaries, fire and weather damage - cost insurers about pounds 800m in the first six months of this year, the equivalent of about pounds 4.4m a day. The statistics are important in that they give an indication of whether, on the basis of recent claims experience, premiums are likely to rise or remain at their relatively low levels. They also allow insurers to determine the cost of cover in each region, based on previous claims experience.

If so, homeowners can comfort themselves that - barring a desperate attempt by insurers to raise their profits by increasing the cost of insurance - premiums will continue to remain competitive.

Yet while the sums appear to be huge, in insurance company terms they are still peanuts. Overall, losses suffered by insurers were down 26 per cent on the same period in 1996. However, after several years of falls in the number and value of claims, the indications are that the most common types - involving theft, burglary and domestic fires - have reached virtually their lowest levels.

This is because the most significant fall in claims, which helped drag the overall figures down, was in relation to weather damage. The amount paid by insurers, some pounds 225m, was down 41 per cent on the same period in 1996, when the first few days of the year led to huge problems from defrosting pipes in the aftermath of the New Year freeze.

By contrast, subsidence claims cost pounds 170m, an increase of 30 per cent, according to the survey by the Association of British Insurers (ABI).

Meanwhile, domestic thefts remained relatively stable, with an average of 1,500 claims every day costing about pounds 276m. At the same time, domestic fire claims came to about pounds 119m, virtually the same as last year.

Despite the overall drop, insurers are warning that the cost of subsidence in particular may force them to put up rates again after several years of bitter competition which has seen the lid kept tightly screwed down on the cost of household cover.

Studies show that the geographic spread of claims shows wide variations between different parts of the UK. One survey shows residents in the North- East of England are most at risk from theft in the home.

Burglary was top of the league, with claims from the North-East 24 per cent higher than those coming from the North-West of England, according to the survey by NatWest Insurance Services, which examined records from its 250,000 customers last year.

By contrast, Scotland and Northern Ireland had the lowest claims for theft from homes.

Storm, flooding and water damage accounted for 37 per cent of all claims in the UK. Oil leakage and flooding accounted for the highest average claim size, while damage to bathroom fittings involved the highest number, numerically, of claims.

Regionally, the survey shows that people in East Anglia are most at risk of having hi-fi systems, radios and TVs stolen. Flooding was also a problem.

The cost of burglary was highest in London, with claims averaging pounds 1,446, more than a third higher than in the North-East of England. At the same time London had the least number of house fires.

Careless removals, averaging pounds 583 a claim, were more expensive in the South-East than anywhere else in the UK although there were less claims here than in many other parts of the UK.

The East and West Midlands shared the lowest number of claims for storm damage. Moving house also appeared to be safer, while flood damage was relatively rare.

By contrast, floods and storms have led to Wales having the highest number of claims for damage, while the principality's accident-prone homeowners also filed the highest average claim for bathroom breakages (toilets, toilet seats, washbasins).

Evidence from NatWest backs the suggestion that Scotland faced the highest number of frost-related claims in 1996. However, its theft figures are consistently lower than most other regions, while there were fewer claims than anywhere else for malicious damage