The price of settling property insurance coverage claims has risen since 2021, the Constructing Value Info Service (BCIS) warned.
Monetary Conduct Authority (FCA) knowledge exhibits that the variety of complaints about property insurance coverage have held regular lately, with the quantity within the first half of 2025 standing simply 3% larger than in H1 2021.
Nonetheless, provisions made by corporations to settle complaints rose by 21% over the identical interval, lifting the typical provision per grievance opened from just below £400 to virtually £470.
Richard MacLean, government director of BCIS, mentioned: “The inflationary pressures dealing with the development trade presently, together with labour shortages, rising materials prices and demand pressures from retrofit and energy-efficiency work, all improve the probability of properties drifting into underinsurance.
“As prices rise, diverge regionally and differ by development sort, sums insured set even a number of years in the past might not mirror the true reinstatement worth of a house.
“Collectively, these pressures are reshaping the true value of repairing or rebuilding broken properties and, in flip, influencing the provisions insurers should make when disputes come up.”
Greater than 93,000 property insurance coverage complaints had been opened within the first half of 2025 throughout the UK, with corporations setting apart greater than £43.6 million to cowl potential redress funds.
Buildings insurance coverage had a 63.2% claims acceptance price in 2024, up barely from 63.0% within the earlier 12 months.
Mixed buildings and contents insurance policies had the next price at 71.9%, however each stay properly under most different insurance coverage merchandise, the place acceptance charges exceed 90%.
This disparity prompted Which? to file a super-complaint with the regulator, difficult what it sees as unfair declare definitions and practices throughout the house insurance coverage market, with a response from the FCA due this month.
Two superficially related properties can carry totally completely different threat profiles and value bases, because of development type, situation, upkeep historical past and publicity to dangers corresponding to flooding or emergency response occasions.
This inherent complexity helps clarify why acceptance charges for dwelling insurance coverage have traditionally been decrease than for different classes and why rising development prices amplify pressures on each declare outcomes and insurer provisioning.
MacLean added: “Claims have gotten dearer to settle as a result of the true value of reinstatement has moved forward of what many policyholders perceive or have insured for. This widening hole is prone to go away extra properties underinsured except rebuild values are stored updated utilizing strong, construction-specific value knowledge.
“For insurers, the rising provisions seen within the FCA’s figures characterize the downstream impact of structural shifts in development. As many within the development trade are realising too, that is our ‘new regular’, not a short-term anomaly, and insurers might want to modify sums insured, pricing and claims selections accordingly.”
