Abbey comes late to the habit of increasing insurance premiums: Contents cover generally more expensive as crime pushes up the number of claims

ABBEY National's decision to put a 37 per cent increase on the premiums it charges for house contents insurance may have caused heartache to some homeowners, but neither its action nor its motives were new for the insurance industry.

A rising tide of crime over the past few years has led to an escalation in theft claims on insurers. This is one among the many reasons that have plunged the leading companies into losses running into hundreds of millions of pounds in the early 1990s.

Abbey National is among the last companies to take decisive action to tackle the problem. Until it imposed a 10 per cent increase in premiums last December, rates had been unchanged for about two years.

The further rise of 26 per cent announced this week means those of its customers who have yet to renew their contents insurance this year will on average see a total rise of 37 per cent.

High as this figure may seem, customers of Woolwich Building Society have suffered worse increases. Last month it increased its contents rates by 50 per cent, coming on top of 10- 15 per cent rises of last May.

Neither Abbey National nor Woolwich is an insurance company. Like other lenders, both direct their business to panels of insurers - Royal Insurance, Commercial Union and Legal & General in the case of Abbey National, Legal & General, Norwich Union, Eagle Star and Guardian Royal Exchange for Woolwich.

In the mid-1980s, the number of burglaries and the claims cost of domestic theft remained broadly stable. However, after 436,271 burglaries in England and Wales in 1989, numbers rose sharply to 527,634 in 1990 and 622,969 in 1991 (Home Office figures). The cost to insurers rose even more dramatically - from pounds 276.4m in 1989, to pounds 363.9m in 1990, to pounds 590.7m in 1991. Last year's total of pounds 749m was getting on for three times as much as in 1989.

By 1991, the leading insurance companies were all talking of the need to impose premium rises irrespective of the loss of customers. Most have done this through a series of smaller rises than those that the building societies seem to have favoured. Commercial Union, for example, increased rates by 12 per cent in October 1991, by 11 per cent in April 1992 and by 10 per cent in October 1992.

The various increases still leave large differences between the premiums charged by different companies. For a three-bedroom house in London SW2, Abbey National yesterday quoted a premium of pounds 330, Woolwich pounds 588, Commercial Union pounds 389 and Legal & General pounds 238. For a similar house in Newcastle NE3, Abbey National quoted pounds 224, Woolwich pounds 483, Halifax pounds 319, CU pounds 236 and Legal and General pounds 140.

Simple comparisons such as these can be misleading since policy details vary.

While most lenders and insurers profess their reluctance to increase premiums further, the latest teenage crime statistics give little hope that rates have reached a plateau.

PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
people
Life and Style
President Obama, one of the more enthusiastic users of the fist bump
science
Arts and Entertainment
Peter Griffin holds forth in The Simpsons Family Guy crossover episode
tv
Life and Style
Upright, everything’s all right (to a point): remaining on one’s feet has its health benefits – though in moderation
HealthIf sitting is bad for your health, what happens when you stay on your feet for a whole month?
News
Kristen Stewart and Rupert Sanders were pictured embracing in 2012
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

HR Business Analyst, Bristol, £350-400pd

£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...

Account Manager - (Product & Account Management, Marketing)

£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...

Training/Learning and Development Coordinator -London

£28000 - £32000 per annum: Ashdown Group: Training/Learning and Development Co...

Day In a Page

A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried