UK landlord insurance is estimated to have made £2.51 billion in gross written premiums in 2012, and produced 7.3% of the country’s non-life insurance category.1
Landlord insurance policies cover the possibilities of risks in renting a residential or commercial property, including damage to buildings and contents, loss of rent, and public liability.
Strength in the sector continued throughout the recession and financial difficulties of 2008-11, when the stagnant housing market caused a rise in rental accommodation.
This marked the turnaround from post-war homeownership, with almost 35% of properties rented through private or social housing landlords in 2012. This was a 5% rise from 2000.
Furthermore, the move to rental properties is also likely to have caused a growing demand for landlord insurance, as a consequence of greater risk aversion, a high number of homeowners decided to rent out their old homes, unemployment causing an increase in the amount of tenants in rent arrears, doubtful businesses dropping their commitment to long leases, and a rise in weather-related incidents.
There are chances that the sector will progress further also. Insurer-led studies have revealed that consumers are not property aware of the insurance cover required for landlords, as a quarter of residential landlords only take standard home insurance. By moving to suitable landlord insurance, there will be large growth potential for premiums in this group. Looser credit conditions and a rise in buy-to-let lending imply further favourable possibilities.
However, the future of available flood insurance is not certain. It has been confirmed since the move from the Statement of Principles to the Government Flood Re plan, that affordable flooding insurance will only be provided for resident homeowners.
Therefore, insurance premiums for landlords are predicted to face additional difficulties in the coming months. Industry experts expect that the number of properties that could be affected is one million.