In February, major US brokers such as Marsh & McLennan , Willis Towers Watson, Aon and Arthur J. Gallagher & Co. declined by 8%-11% in a single day on news that OpenAI, the owner of ChatGPT, had approved the first insurance-focused AI app designed by US intermediary Insurify. OpenAI's tool arrived a week after Claude, the model developed by Anthropic, also released a new plug-in to automate sales, legal and financial analytical functions.

As well as this risk of obsolescence, investors have had to try to factor in the growing challenges of a so-called “soft” insurance market. Since 2017, the insurance market has been in a “hard” phase, where prices have been rising, and profits have jumped. However, two years ago, prices started to flatten and then fall as the market turned from hard to soft. The hard market was very good to Marsh & McLennan (NYSE: MRSH). Between 2017 and the beginning of 2024, shares in the broker and global-intelligence company rose more than 200%, but since topping out in the first half of 2025, they have fallen by around 28%.

This decline was needed. Insurance is a highly cyclical business and, coming into the soft cycle, Marsh was trading at about 22 times forward earnings, a multiple that left little, if any, room for error. After the re-rating, the shares are now trading at just 16.8 times forward earnings, according to UBS. That is still a bit high for this stage of the market cycle, but there's a good argument that you should start buying the shares at this level.

Marsh & McLennan plays an important role in the insurance market

Marsh & McLennan is the parent firm of Marsh Inc, one of the world's largest risk-management and insurance-services firms. The group also owns Guy Carpenter, a risk-management and reinsurance specialist; management consultancies Mercer, plus Oliver Wyman and Jardine Lloyd Thompson Group (JLT), an insurance, reinsurance and employee-benefits broker based in London.

The group's largest division is Marsh Risk, which generated $14.4 billion in revenue in 2025. The second largest is Mercer, with revenue of $6.2 billion, and Marsh Management Consulting, at $3.6 billion. The total consulting business turns over $9.8 billion a year. The risk-management and insurance businesses (including Marsh Risk) generated $17.3 billion in revenue.

Marsh Risk plays an important role in the insurance market. Large, complex risks are often underwritten by pools of insurers and reinsurers bought together by brokers. The insurers like it because they're not overly exposed to a single risk, and the buyer of insurance likes the security of multiple parties underpinning the contract. Marsh Risk helps navigate this process. The company also manages the claims process, which most large insurers and reinsurers don't have the capacity to handle, as it can be costly and time-consuming.

For example, Marsh has helped set up a clean hydrogen insurance facility, where developers pay an insurance premium, and Marsh negotiates insurance coverage with insurers to transfer the risk from the project owners' balance sheets. Investors (in this case, the insurers) provide capital investment for the projects, with their risk exposure mitigated by tailored insurance coverage. In the event of insured incidents, Marsh manages the claims process. The single platform helps lower costs for all involved.

It's hard to imagine a world where AI disrupts this process. It will certainly help streamline the paperwork, but the human touch of the Marsh brokers will always be required to navigate deals among key stakeholders. This business is highly profitable and cash-generative. The insurance arm booked an adjusted operating margin of 32% last year, compared with 21.1% for consulting. Of the $7.3 billion in adjusted operating income, $5.3 billion fell to the bottom line as operating cash flow. The company's return on invested capital, a measure of profit for every £1 invested in the business, is 25%.

How Marsh is embracing AI

The real AI threat is to Marsh's consulting arm, but even here, the company claims it is addressing the potential risk. In the company's first-quarter results, it said Oliver Wyman's AI Quotient, which helps firms deploy and scale AI tools, has advised on upwards of $50 billionin AI investment. This helped the consulting arm outperform in the first quarter, with Oliver Wyman recording revenue growth of 6%, ahead of group top-line growth of 4%.

Management is deploying these tools internally to help reduce costs. It's targeting a total of $400 million in savings over three years and has logged a 20% improvement in efficiency through AI-powered document processing. Other tools have saved an estimated one million hours of the team's time in the first year. UBS estimates this could help drive Marsh's return on invested capital to near 30% by the end of the decade.

So while the market frets about the risk AI poses, the company is quietly leveraging the technology to enhance its own services. This suggests that, if anything, the firm is an AI play.

Marsh's most important assets are its people and technology, and while it spends heavily on both, overall capital spending requirements are low. As a result, most of the cash generated from operations converts to free cash flow. Management has set out to return as much cash as possible to investors. At the end of last year, management authorised a $6 billion share buyback, with $750 million deployed in the first three months of the year. While the market was selling, Marsh was buying its own shares.

Cash flow is the firm's most attractive quality. While the shares might not look too cheap on a price-earnings basis, according to UBS, the shares are trading at a forward free cash-flow yield of 6.2% for 2026, 6.7% for 2027 and 8.1% for 2030.

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Could taking out life insurance help ease the worsening headache of inheritance tax (IHT) facing hundreds of thousands of families in the UK?

It could certainly help, say financial advisers, but that advice comes with a string of caveats – including a warning that you could end up paying out more in total premiums than the tax bill your family eventually ends up with.

Certainly, sales of whole-of-life insurance policies – the type of cover best-suited to inheritance-tax planning – are booming. Britons spent 18% more on premiums on such policies last year than the previous year, reflecting a growing concern that a tax once paid only by a wealthy minority is rapidly becoming an issue for middle-class families who don't regard themselves as especially affluent.

The government says very few families currently pay inheritance tax. That's true – in 2022-2023, the most recent tax year for which figures are available, fewer than 5% of deaths resulted in an inheritance-tax charge. Just 31,500 families faced a bill. But the numbers are set to rise quickly. The government's own projections suggest 10% of deaths will trigger an inheritance-tax liability by the 2029-2030 tax year; in other words, the number of families paying the tax is expected to more than double within just seven years. The official forecast is that inheritance tax receipts will rise to £14.5 billion by 2030-2031, 67% more than the Treasury expects to net in the current financial year.

This trend is well under way, says Shaun Moore, a tax and financial planning expert at wealth management firm Quilter. “IHT receipts for the 2025-2026 tax year reached £7.7 billion by the end of February, surpassing the 2023-2024 total of just under £7.5 billion with a month still to go,” he says. “IHT is certainly no longer a tax aimed only at the mega wealthy.”

There are a couple of reasons for this. First, the inheritance-tax threshold – the size of estate at which the tax becomes payable – has now been frozen since April 2009. The then Conservative government did introduce an additional “residence nil-rate band” in 2017, providing extra headroom against the value of the family home, but this has also been frozen at £175,000 ever since. The current government has said these freezes will remain in place until at least April 2031. This inevitably drags more people into the inheritance-tax net as household incomes and asset prices rise. The average value of a house, for example, has risen by more than 70% since April 2009.

In addition, the current government has added to the list of assets that count towards the value of your estate for inheritance tax purposes. Most significantly, from April 2027, any private pension savings you hold in defined-contribution schemes that are remaining at the time of your death will count towards your estate. Currently, most pension assets are exempt from inheritance tax.

The government is cutting some of the inheritance-tax reliefs available to families. Its plans include a cap on the 100% business or agricultural relief applied when bequeathing businesses or farms – from 6 April, you will only be able to pass on assets worth up £2.5 million free from tax per person; above this threshold, inheritance tax will apply at 50%. However a couple will still be able to pass on £5 million assets between them.

Taking out life insurance is becoming increasingly popular

Against this backdrop, many more families are rightly concerned they will one day face an inheritance-tax bill – and potentially a significant charge. That is prompting more families to plan ahead, with strategies such as taking out life insurance becoming increasingly popular. “As the screw is being turned on reliefs and exemptions, more families and their advisers are now reaching for the security of insuring against the IHT liability,” says Ian Dyall, head of estate planning at wealth-management firm Evelyn Partners.

It's a relatively simple concept. The idea is to work out how much inheritance tax your family is eventually likely to be liable for, and then to take out a life-insurance policy that will pay out enough to meet this bill. The most common – and simplest – type of life cover is term assurance, which pays out a fixed sum if you die during the term of the policy. However, this won't work for an inheritance-tax liability, since you can't be sure when you will die – if you live beyond the term of the policy, there won't be a pay-out. Instead, you typically need whole-of-life cover: as long as you continue to pay the premiums, these policies will pay out whenever you die.

It's also important that the policy is written inside a trust, a legal structure that ensures the proceeds of the insurance fall outside your estate. Otherwise, your family may face an additional inheritance-tax liability courtesy of the insurance pay-out. Most advisers and insurers will be able to help you structure the cover in this way, though there may be fees to pay for this service.

So far, so good, but there are issues with whole-of-life cover. First, it's important to understand what the cover will cost you – both today and in the future. Insurers calculate premiums according to factors such as your age, health and the size of the policy, and you may have to undergo a medical examination. The cover comes in two forms: reviewable, where the insurer has the right to increase your premiums over time, and guaranteed, where the premium you start with will never change. The latter tends to be more expensive at the outset, but gives you certainty that premiums will remain affordable for as long as you need the cover.

Whole-of-life premiums can be costly. Evelyn Partners says that for a healthy 50-year-old client seeking guaranteed cover of £1.4 million, the monthly premium would be roughly £1,250. Such a client would have to live until the age of 143 to have paid out more in premiums than the value of the insurance pay-out, but these are still sizeable monthly payments. Moreover, for older policyholders, the cost will be higher, particularly as health deteriorates, and some people may even struggle to secure cover. In some cases, total premiums paid will exceed the payout insured much sooner. For this reason, advisers often suggest taking out life insurance when you're younger – in your 50s or 60s, say.

“We'd look at whole-of-life insurance as a young person's game, comparatively,” says Tom Mullard, business director for tax services at TIME Investments. “If you get guaranteed premiums, you know what you're paying, and you may even have investments generating returns from which you can pay the premiums so that you're not really seeing a decrease in your capital.” This does mean it's likely you'll be paying the premiums for longer, but the good news, adds Dyall, is that costs could fall. “Prices appear stable and, in some instances, are even coming down as providers compete for market share in the growing market.”

Is it better to save the money instead?

Still, some question whether whole-of-life insurance offers good value, particularly for policyholders in good health with many decades of life ahead of them. And once you've signed up for a policy, changing course by cancelling the cover will mean you've wasted the money spent so far. James Baxter, founder of financial planning firm Tideway Wealth, says it makes sense to think of a such policies as more like a savings plan than an insurance contract. You're effectively putting money aside each month so that eventually there is enough to pay a bill. “People should ensure that they understand these policies before signing as it could cost them more than they realise,” Baxter argues. “If a couple take out a policy aged 64 and one of them lives beyond 90, the effective return drops below risk-free rates, making the policy a less attractive savings vehicle.”

What he means is that by the time you get into your 90s, you'll have paid so much out in premiums that the sum your beneficiaries will get back represents a negligible – or even negative – return on the money. You'd have been better off putting the same amount of money into a risk-free bank or building society savings account each month. The counter to this argument is that funding an IHT liability through regular savings would not provide the certainty that many families want and need. You can't be sure you'll live long enough to put enough money by to settle the bill. Nevertheless, if you are going to go down the insurance route, it's vital to keep costs down. Shopping around will help –an independent broker can provide valuable help here – but it's also important not to think of insurance as a silver bullet for IHT planning.

Importantly, the more you can do to reduce your family's IHT liability, the less insurance you'll need to take out. That means ensuring you take full advantage of other IHT planning opportunities. “Life cover does not replace good planning – it supports it by dealing with the elements that planning cannot fully remove and by creating certainty,” adds Lyall. “The better the underlying planning, the smaller the amount of life cover required and the more manageable the premiums become.”

Make full use of gifts to reduce inheritance tax

Certainly, it's important to make full use of your gifting allowances to reduce the size of your estate. You can make gifts of up to £3,000 each year with no liability for tax, as well as many smaller gifts worth no more than £250 per person. Gifts of any size to charity are also exempt from tax and there are additional allowances for gifts for a family member's wedding or civil partnership. Gifts from income can also work well. If you can show that your regular monthly income exceeds what you need, you can give away as much of the excess as you like with no tax consequences.

In addition, consider making potentially exempt transfers – these are gifts that will fall out of the value of your estate for tax-planning purposes as long as you live for at least seven years after making them. You can even insure for the possibility of not living that long (see below).

Beyond gifting, professional advisers can help you with other IHT planning strategies, from the use of investment vehicles such as the enterprise investment scheme (EIS) to maximising business relief. “The bigger point is that planning has to start earlier,” adds Mullard. “It can be hard to justify thinking about these issues when you may have 40 years of life left ahead of you, but it will make it easier to come up with a holistic solution.”

Some nuances to consider

While whole-of-life cover may be ideal for insuring against your family's eventual inheritance tax (IHT) liability, term assurance could help you address a more immediate issue. Giving away large sums or valuable assets will reduce the value of your estate for IHT purposes – and therefore cut your family's bill – but these potentially exempt transfers only drop out of the IHT net seven years after you make them. In which case, a term assurance policy could provide cover against you dying sooner than expected and triggering a tax liability. The idea is to take out the insurance you need only for a set period – until your gift becomes fully exempt from IHT. This will usually be much more affordable than whole-of-life cover.

One nuance to consider here is whether your gift is eligible for taper relief, which could apply if you die with seven years of making it. After three years, many gifts qualify for this, with the rate of IHT payable falling from 32% at three to four years, to 8% at six to seven years. If so, you can take out a “decreasing term assurance” policy, which pays out a reducing amount over the term of the policy, and therefore costs less. Taper relief only applies if the total value of the gifts you make before you die exceeds the £325,000 tax-free IHT threshold.

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Strikes carried out by the US and Israel on Iran and the widespread fallout since have left many travellers in the lurch with flight cancellations, delays or possibly being stranded. We look at what help you can get from your travel insurance.

Flights have been cancelled and delayed across the Middle East including from airports in Bahrain, Israel and the United Arab Emirates (UAE).

Meanwhile, hotels and apartment blocks have been struck by retaliatory airstrikes in places like Dubai and Abu Dhabi.

If you've been affected by the ongoing tensions, then here’s everything you need to know about getting help from your insurer and if you are covered.

Will travel insurance cover me for the Iran conflict?

Most standard travel insurance policies will not cover you if you need to make a claim due to something which has happened to you as a direct consequence of war or conflict. For example if your flight is cancelled, you’re evacuated, luggage is lost or you need to cover medical expenses.

The US-Israeli strikes on Iran fall under this category and it is unlikely you will be eligible to make any claims emerging as a result of the conflict.

Tim Riley, managing director of travel insurer True Traveller and chairperson of the UK Travel Industry Association, said this is because war presents “systemic, unpredictable risks that cannot be priced into conventional travel insurance products”.

The only time you might be able to make a successful claim on your travel insurance in a country that’s at war is if you signed up for something like a “high-risk travel insurance” policy.

These are specifically designed to cover you in areas where Foreign, Commonwealth & Development Office (FCDO) warnings are in place, but these policies come at a premium and there is often eligibility criteria.

Will insurers cover me for flight cancellations?

If claiming due to war or conflict then most standard travel insurance policies won’t cover you.

However, if your flight is covered under UK law, your airline has to let you choose between getting a refund or being booked onto an alternative flight if your flight is cancelled.

If your flight is coming from the Middle East, for example, you will be protected under UK law.

Will my luggage be covered and what if I have medical needs?

You won’t be covered for lost luggage under most standard policies, unless it was lost due to a reason unrelated to the war or conflict.

This same rule applies if you have medical needs.

Rhys Jones, travel insurance expert at MoneyWeek’s sister company Go.Compare Travel, said: “Emergency medical treatment, including issues arising indirectly from unrest, is generally included within standard policies, though insurers may request documentation that you followed official guidance.”

What are the rules for package holidays?

If you booked a package holiday via a UK tour operator, you are entitled to cancel without paying cancellation fees under the Package Travel Regulations 2018 and should receive a full refund, typically within 14 days, provided the warning significantly affects your trip.

If you have booked flights and accommodation separately, your flight rights are as described above, while you might be able to get a refund from a hotel or accommodation where you’ve booked to stay.

If you can’t get a refund under the hotel or accommodation’s policies, you will likely not be covered under a standard travel insurance policy.

Make sure you check the FCDO website regularly

One of the most helpful things you can do, in terms of travel insurance, is check the FCDO website regularly for travel updates.

Travelling against FCDO advice will often invalidate a travel insurance policy.

Guidance can often change quickly so it’s important you’re up to speed with what the government is advising.

Here is the list of countries where the FCDO is advising against all travel (as of 3 March):

• Afghanistan
• Iran
• Iraq
• Israel
• Palestine
• Syria
• Yemen

Here is the list of countries where the FCDO is advising against all but essential travel (as of 3 March):

• Bahrain
• Jordan
• Kuwait
• Lebanon (the FCDO is advising people against all travel to the outer part of the country)
• Qatar
• United Arab Emirates

Be aware, your travel insurance may still be invalidated even if you travel to a country where the FCDO is advising against all but essential travel.

From health checks and vaccinations to dental work and emergency care, veterinary costs can be substantial. While a record 4.6 million pet owners had insurance in 2024, according to the Association of British Insurers, this is the equivalent of just one in six (17%). In a survey of 1,205 pet owners by Co-op Insurance, 34% said they avoid visits to the vet, with a fifth doing so owing to the expense.

Prices depend on several factors, such as the type of animal and the procedure, as well as region. The average cost of a vet out of hours is £316 in the southeast of England (excluding London), compared with £241 in the north of England, according to pet insurer Many Pets.

Keeping vet bills down

Buying pet insurance can give you peace of mind that if your animal needs veterinary care, the policy can help with the costs. It is not a legal requirement, but it could save you money at the vet throughout their lifetime.

“Ultimately, pet insurance is an important safety net that can help you avoid large, unexpected vet bills,” says Rhys Jones, pet-insurance expert at comparison site Go.Compare. “Most cats and dogs will, unfortunately, need treatment for an illness or injury at some point in their life and veterinary treatment can be eye-wateringly expensive.” The average monthly pet-insurance premium in the UK is £13.13 for a pedigree dog and £11.10 for a pedigree cat, according to Go.Compare.

The breed of your pet can affect the cost of coverage, as can location, environment and vet costs. The animal’s age and veterinary history may also drive up prices. Note too that premiums could be higher if your pet has a pre-existing medical condition, for instance.

How to find the right pet insurance

To find the right pet insurance, shop around. Price comparison websites let you compare coverage and cost in one place. Some insurers will let you pay premiums annually rather than monthly, which could lower costs. If you care for more than one animal, see if you can secure a multi-pet discount. Some insurers offer money off for insuring more than one pet on the same policy, and the savings could be significant.

Spaying or neutering your pets may also be worth considering. This can help prevent unwanted litters and reduce aggressive tendencies, as well as lower the risks of certain health conditions, meaning that some insurers might cut the premium they offer, says Jones. Furthermore, getting regular and routine check-ups will not only help your pet stay fit and well but also help avoid even bigger vet bills if any treatment or medication is required.

Types of pet insurance to consider

There are four different types of pet insurance coverage. A lifetime policy will cover the cost of the treatment for your pet throughout their lifetime, although there will still be a yearly limit. This is the most popular, comprehensive and expensive type, according to the charity The People’s Dispensary for Sick Animals (PDSA).

Second, maximum benefit cover will give you a pre-set amount of cover on each injury or illness. There is no time limit, so you can claim as many times as you need to until you reach the maximum benefit.

Time-limited cover, as the name suggests, spans a certain period. For example, a 12-month policy will cover vet fees for up to one year. It will also have a financial limit, so the policy can end before the time period passes.

Finally, accident-only policies cover the cost of treatment if your pet is involved in an accident. This type of cover can be a lot cheaper, but wouldn’t protect you if your pet develops an illness or health condition.

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Many UK adults are wildly overestimating the cost of life insurance and risking leaving their families financially vulnerable by delaying coverage until key life events, according to new research.

Cost is the biggest barrier to people taking out life insurance, research by life cover provider Legal & General (L&G) found in its study of 2,000 adults. More than a quarter (27%) of those asked said they believed life insurance was “too expensive”.

Yet on average, people overestimate the monthly cost of life insurance by 184%, the survey found – believing it to be £79.50 a month when the actual average L&G policy cost was £27.95 in 2024.

Policies from other providers could cost more or less. According to Compare the Market data, the average cost of life insurance per month is £17.07, based on data from September 2025.

James Shattock, managing director UK protection at L&G, said: “There is a significant perception gap when it comes to life insurance. It’s a core part of financial wellbeing for anyone with dependents and is often far more affordable than people realise.

“Starting a policy early can mean lower premiums and stronger protection, while delaying coverage leaves families exposed to unexpected financial pressures.”

Concern about cost was particularly high among adults aged 45 to 54. But even younger adults, aged 18 to 24, who actively review their personal finances an average of 35 times a year, had a similar perception.

When those polled were asked what might persuade them to purchase life insurance, 35% cited “lower monthly cost,” with those in Wales much more likely to be persuaded by lower costs.

We look at the five insurance policies you should have in a separate article.

When should I get life insurance?

Misconceptions about the cost of life insurance are contributing to delays in people taking out policies, the L&G study found, as they wait until they believe they are more financially settled before getting a policy.

Previous L&G research in 2024 highlighted this trend, showing 6.5 million UK adults are postponing financial products, such as life insurance, until they reach key life milestones like buying a home, getting married, or starting a family.

Although, these events are occurring later than in previous generations, or not at all, due to personal choice or other circumstances, leaving people exposed.

For example, spending years living together first means marriages are happening later. In 2023, the average age of marriage for opposite sex couples was 34.8 for men and 33 for women, according to Office for National Statistics (ONS) data. Among those born in 1983, half of women were married by age 35 and half of men by 40. A decade earlier those ages were 31 and 35 respectively.

Broader societal patterns reinforce this behaviour: in 2025, fertility rates in England and Wales reached record lows, the Guardian reported, the median age for a first marriage is approximately 31, and the average first-time homebuyer in England is 34.

The benefits of getting life insurance early

1. It’s usually cheaper

The main benefit of getting life insurance when you are younger is that it is highly likely to be much cheaper than if you get it when you are older. You get to lock in lower premiums because younger, healthier individuals often pay significantly less for coverage.

2. Protection against an early death

Taking out a policy early can also mean you ensure dependents are financially secure in the event of an untimely death.

3. Provide peace of mind

Life insurance removes uncertainty, allowing those with it to focus on long-term financial goals like pensions and investments, knowing the foundations are covered.

4. Cover unexpected costs

From mortgage payments to childcare or funeral expenses, life insurance can prevent loved ones from inheriting debt.

Families hunting for ways to stave off inheritance tax bills are sending life insurance sales soaring – but lawyers are warning the payment strategy could be worthless unless structured the right way.

With more estates becoming liable for inheritance tax (IHT), the data suggested individuals have been increasingly turning to life insurance to shield their families from future inheritance tax bills – so-called ‘inheritance tax insurance’. The idea is the payout from the insurance policy will cover the cost of any future IHT bill after the policyholder dies.

The total value of life insurance sales jumped by 18% to £447m in the 12 months to 31 March 2025, up from £378m in 2023/24, according to Financial Conduct Authority (FCA) data.

The surge follows the widening in scope of assets subject to inheritance tax announced at the 2024 Budget that will see more estates owing IHT for the first time.

From April 2027, as a result of the changes, any unused pensions will be included in IHT calculations and so could potentially be taxed up to 40%. The value of these pensions will push many families above the £325,000 IHT nil-rate band.

Inheritance tax will also be due on agricultural property and business property – such as family-owned businesses and farms or AIM shares – from April 2026, taxed at a rate of up to 20%.

However TWM Solicitors, a private wealth and family law firm that obtained the FCA life insurance data via a Freedom of Information (FOI) request, warned life insurance policies must be held in trust to avoid costly tax and probate delays.

Duncan Mitchell-Innes, partner and deputy head of private client at TWM Solicitors, said: “Holding life insurance in specific types of trusts can exempt it from IHT, making it a powerful estate-planning tool. Life insurance payouts are also free from income and capital gains tax.”

Writing a life insurance policy in trust

Most people don’t realise that if life insurance isn’t written into trust, it forms part of the estate – potentially triggering 40% inheritance tax and delays through probate.

With a life insurance policy written in trust, the proceeds of the policy can be paid directly to your intended beneficiaries, rather than to your legal estate. This means there is no IHT to pay on the payout.

Mitchell-Innes said: “Life insurance can be a powerful estate-planning tool, but only when structured correctly. If not held in trust, the policy may be taxed for IHT and tied up in probate, defeating its purpose.”

"With the recent changes to IHT, life insurance remains one of the few effective tools for families to protect their estates. However, it is crucial to structure these policies correctly to maximise their benefits."

Most providers have an online trust section on the application so it’s an easy process and secures the money going to the right person(s).

Should you take out life insurance to pay an IHT bill?

Financial advisers have told MoneyWeek they have seen a spike in enquiries about whole of life insurance – so-called ‘inheritance tax insurance’ – since Autumn Budget 2024, as a way to pay for an expected new wave of inheritance tax bills.

Whole of life insurance, also known as life assurance, is a type of life insurance policy that provides lifelong coverage. It pays out a lump sum to your beneficiaries whenever you die, as long as premiums are maintained – but these can be costly.

To take out a whole of life policy at age 60 to cover the cost of a £300,000 inheritance tax bill – the roughly projected average for London in the 2026/27 tax year – would cost a non-smoker around £1,000 a month, or £12,000 a year, according to CIExpert, an insurance specialist financial adviser.

Mitchell-Innes said: “Life insurance is one of the few routes left and we have seen an increased number of enquiries for advice in this area.”

“Other than gifting assets, there are fewer and fewer ways to reduce your family’s IHT bill.”

We look at gifting to avoid inheritance tax and other ways to reduce your inheritance tax bill in separate articles.

The insurance market splits into commoditised and specialist products. Commoditised products, such as car or home insurance, are standardised, widely available and easy to price. Competition is intense, driving premiums down and margins close to the cost of capital.

Specialist products, such as cyber liability or offshore oil-rig cover, are complex and harder to sell. Their bespoke nature and the expertise required allow higher premiums and stronger returns when managed well. Put simply, specialised insurance markets tend to be more profitable but smaller, while less specialised ones are larger but less lucrative.

Beazley (LSE: BEZ), founded in 1986 and listed on the FTSE 100, operates across this spectrum. Headquartered in London, it underwrites through seven Lloyd’s syndicates and has a global footprint in Europe, North America, Asia and Latin America. Its business is divided into five segments: cyber risks, MAP (marine, aviation, political) risks, property risks, specialty risks (such as professional indemnity and healthcare), and digital products for small and medium-sized businesses (SMEs).

Beazley is a market leader in high-margin lines such as cyber liability, directors and officers (D&O), and environmental liability, but it also writes property and reinsurance, including small commercial and high-value residential properties.

Unlike mass-market insurers, Beazley focuses on areas requiring deep expertise. Its property-risks division insures complex assets such as industrial sites, major art collections and high-value homes, where competition is lower and margins higher. Its cyber-risks division, supported by Beazley Security, addresses the growing threat of ransomware and data breaches, a segment with rising demand.

At the same time, it writes more accessible SME liability products through digital channels, balancing dependable lower-margin lines with its specialist core.

Diversity is Beazley’s strategic strength

Beazley’s ability to mix commoditised and specialist products is a strategic strength. Commoditised lines, such as business-premises insurance, provide stable cash flows and a broad customer base. These products are easier to scale, helped by Beazley’s digital platforms and Lloyd’s broker network, though their returns remain thin.

Specialist lines, such as cyber or marine insurance, require skilled underwriters and carry higher risks, but can deliver strong profits when executed well. For instance, Beazley’s cyber products, including Beazley Breach Response, have captured surging demand, with premiums in this segment growing strongly over the past two decades.

This blend of dependable work mixed with lucrative specialist business provides balance to Beazley and mitigates volatility. In 2017, when hurricanes Harvey, Irma and Maria struck, property and reinsurance businesses posted heavy losses across the sector.

Beazley was also hit, but its specialty lines cushioned the impact and allowed it to report a modest group profit. In other words, it acted like a portfolio of businesses within Beazley lowering overall risk.

The company ended the year tested but resilient. Strong diversification and balance-sheet strength underpin high-quality insurance businesses, as years with large losses are inevitable in the industry. Beazley’s geographic spread adds another layer of resilience, with less than half of premiums now earned inside the US, down from 66% a decade ago.

By blending dependable and higher-return lines, Beazley has delivered consistent performance across cycles. Book value per share has compounded at an impressive 10% per annum since the global financial crisis, with a rising and dependable dividend, enhancing shareholder returns.

Lloyd’s of London: the heart of operations

Beazley’s success is closely linked to Lloyd’s of London, the world’s oldest and largest insurance market, dating back to 1688. Lloyd’s is not a single insurer, but a marketplace where syndicates pool risks. Beazley manages seven syndicates, which are groups of underwriters backed by capital providers.

Lloyd’s global broker network and trading licences give Beazley access to risk markets worldwide, including areas such as marine and political contingency that were pioneered at Lloyd’s.

Lloyd’s requires syndicates to hold capital well above normal regulatory solvency levels. This is to protect the credit rating of Lloyd’s and ensure it can borrow at a low rate. Beazley goes further than the already stringent regulations, keeping additional capital to ensure it can write business even after major losses.

This conservative approach allows it to expand in “hard” markets following catastrophes, when weaker competitors withdraw and premiums rise. During these periods, the best business is written, making financial resilience critical.

The combined ratio explained

The combined ratio is the insurance industry’s key profitability measure. It compares claims and expenses with premiums earned. A ratio below 100% indicates an underwriting profit, while above 100% signals a loss. For example, a ratio of 94% means 94p of every £1 in premiums goes to claims and costs, leaving 6p profit before investment income.

The ratio is cyclical. High ratios, often caused by large catastrophe claims, cut industry capital and force insurers to raise premiums. This creates a hard market, with lower ratios and stronger profitability. Conversely, long periods of low ratios attract competition, driving premiums down and ratios higher in a “soft” market. This cycle means unusually high or low ratios rarely last long.

After years of high ratios and losses, the industry is currently very profitable as capital left the sector seeking better returns elsewhere. In other words, the industry has recently spent several years in a soft market, but has moved much harder recently.

Beazley’s journey through the cycle

Beazley’s combined ratio has reflected these cycles. In 2017, hurricanes in the US and Mexico pushed its property division’s ratio to very high levels, although group diversification kept the overall figure more manageable.

The early 2020s saw elevated ratios again, with business interruption due to Covid claims leading to a half-year loss in 2020. The market hardened after Covid, with reduced competition and higher premiums. By 2023, Beazley’s undiscounted combined ratio had fallen to record lows, though recent announcements suggest the market is beginning to ease, which may lead to more modest profitability for a time.

These low ratios reflect strong underwriting and favourable markets. Beazley has benefited from premium increases in specialist lines such as cyber and professional liability, while its efficient claims handling keeps costs down. Although current conditions cannot last indefinitely, well-managed insurers such as Beazley remain well placed across market cycles.

A well-run firm with a strong balance sheet

Beazley’s current profitability may be at a cyclical peak, but its operational strength and financial health suggest durability. Led by CEO Adrian Cox since 2021, the company has maintained a culture of underwriting excellence, with experienced teams empowered to act quickly. The balance sheet is strong, with capital buffers well above Lloyd’s requirements.

This strength allowed Beazley to write $5.7 billion in premiums in 2024, up from $5.4 billion the previous year.

Beyond underwriting, Beazley earns income from investing its float. A float represents the premiums that are collected before claims are paid – in other words, money received for selling insurance but not yet paid out in claims. This float is often held for months or years and provides a steady revenue source.

Beazley invests mainly in high-quality, short-duration bonds, such as government and corporate debt, to ensure liquidity and match liabilities. This conservative approach aligns investment maturities with claims and protects capital. It also allowed Beazley to benefit from higher interest rates in 2022 and 2023, boosting returns without increasing risk.

Staying afloat

The size and management of the float are critical to Beazley’s profitability. Underwriting is cyclical, but investment income provides stability during volatile periods. Beazley avoids equities or illiquid assets, focusing instead on bonds rated A or higher, which make up 80% of its portfolio. This discipline helped it navigate the low-yield environment of the 2010s and to capitalise on the rate rises of recent years.

Float investment carries risks, such as interest-rate changes affecting bond values or prolonged low rates reducing yields. Beazley manages this through active portfolio adjustments, shifting durations and diversifying into cash and short-term securities. Combined with oversight from Lloyd’s, this approach ensures the float contributes reliably to profitability. In 2023, Beazley reported a 30% return on equity, underlining the value of this dual-income model.

A valuable portfolio diversifier

Beazley’s investment appeal lies in its diversification. Insurance stocks often move independently of broader markets, since their performance depends on underwriting cycles and catastrophic events rather than general economic growth. This low correlation provides a useful hedge, especially for equity-heavy portfolios.

Specialist lines, which benefit in hard markets, add a counter-cyclical element, while commoditised lines provide stability.

Risks remain. A softening market could raise combined ratios and cut profits. Large catastrophes could strain reserves. Regulatory changes or a surge in cyber claims could also create challenges.

Takeover speculation, as seen in 2024, adds further uncertainty, though Beazley’s scale and syndicate strength make it an attractive premium target. Yet its diversified book, conservative balance sheet and underwriting record help mitigate these risks.

A stock to watch

Investing in specialist insurance companies can appear daunting, but Beazley is a high-quality business with a strong record. Its discipline in underwriting and capital management has produced returns that outperform the wider market. Beazley may not be widely known outside the insurance sector, but its expertise and global reach make it a leading FTSE 100 insurer.

By combining commoditised and specialist products, using Lloyd’s global platform and maintaining a strong balance sheet, it has delivered consistent value. Its combined ratio may now be close to historic lows, signalling peak profitability, but its quality and diversification should ensure resilience as markets shift.

For investors seeking diversification and exposure to a well-run insurer, Beazley offers a compelling case. With a record of navigating cycles and a valuation that underplays its quality, this is a stock to watch.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Making sure you have enough cover when going abroad is vital to ensure that you are not met with any unexpected expenses.

Travel insurance is one of the five insurance policies you should have, and will typically cover your medical expenses if you fall ill while on holiday, or the cost of replacing your belongings if your baggage is stolen.

You'll need to fork out an average of £25 for a single trip, according to Co.Compare (while it's much more for the over 70s, whose average cover is £107.56 per single trip, MoneySuperMarket says) to get coverage. Nevertheless, travel insurance tends to be worth it to make sure you are not left thousands of pounds out of pocket should an incident arise.

However, each year, some travellers inadvertently invalidate their travel insurance by breaching a condition of their policy, or accidentally being under-insured.

We look at five common ways you can invalidate your travel insurance, and how to avoid the issues.

1. Not declaring pre-existing medical conditions

One of the easiest ways to invalidate your travel insurance is by forgetting to tell your provider that you suffer from a medical condition.

Though travel insurance premiums tend to be higher when you declare your medical condition, failing to do so could mean you breach the terms of your coverage and will not qualify for a payout in an emergency.

This is doubly concerning as if you have a pre-existing condition, you may be more likely to fall ill on holiday. Should your cover fall through, you could be left stuck with a large hospital bill.

Tom Lyon, insurance expert at Compare the Market, told MoneyWeek: “Travel insurance is there to help protect you if things go wrong while you’re travelling, but there are instances where you can invalidate your policy without realising it.

“One pitfall is not declaring pre-existing medical conditions which could leave you with no cover for related claims, so it’s always best to declare everything when you purchase your policy.”

2. Doing extreme sport

Some people think that when you buy travel insurance, you are covered no matter what – but this is often not the case.

Most travel insurance plans do not include extreme activities, so if you are injured doing them, you may not be able to claim back some medical expenses.

For example, the government estimates that if you have a quad bike accident in Greece and need surgery and medical repatriation, it could cost you more than £25,000 if you did not opt for the right type of insurance.

Common activities that your travel insurance might not cover include jet skiing, kayaking, bungee jumping, horse riding.

If you are planning on doing an extreme activity on holiday, contact your insurer to make sure that you will be covered.

Lyon said: “Most standard travel insurance policies tend to exclude more extreme activities such as skiing or scuba diving but some also will exclude less extreme activities such as hiring a jet ski or quad bike.”

To avoid invalidating your insurance this way, Lyon advises travellers to plan ahead and “take out additional or specialist cover for relevant activities before you travel, but always check your policy before undertaking any unplanned activities to understand the cover you have purchased”.

3. Leaving your belongings unattended

Another common way for your travel insurance to be invalidated is if your belongings were lost, stolen, damaged, or destroyed while you left them unattended.

The definition of ‘unattended’ differs between insurers, so it is best to check before submitting your claim.

For example, the Post Office’s definition means that if you are not in full view of your property or are unable to stop a third party from taking it, you are classed as leaving them unattended.

Lyon at Compare the Market said: “Keep your valuables close by, and make sure your policy matches your trip.”

4. Being drunk when an accident takes place

While some people like to enjoy a drink while on their holidays, excessive drinking can jeopardise your travel insurance coverage.

Being drunk makes people more at risk of acting in a dangerous manner. As insurers don’t want to foot the bill for reckless behaviour, they often include a clause stating excessive drinking invalidates any cover.

Insurers also invalidate cover if you are under the influence of illegal drugs too.

5. Travelling against Foreign Office guidance

If you travel to countries that the Foreign Office (FCDO) advises against visiting, you may invalidate your travel insurance, depending on your provider.

If you have to go to a country that the FCDO tells you to avoid, you should make sure that this is permitted by your insurer and contact them to avoid complications.

After a lifetime of paying into the system and building up your pension savings, many people want to spend their retirement relaxing at home and going on holidays abroad.

When travelling abroad, however, it is important to make sure that you are covered if something goes awry.

Travel insurance can help with this. Although it adds to the upfront cost of a holiday, travel insurance is often worth it as it protects you if your flights are disrupted, your luggage is stolen, or your hotel cancels on you.

A policy can also help with medical costs if you are injured or fall ill while abroad. This is why it is one of the five insurance policies that you should have.

We look at how over 70s can get travel insurance, how much it costs, and what they should make sure it covers.

Can you get travel insurance for over 70s?

Yes, broadly speaking, over 70s can get travel insurance in the usual way through insurance brokers.

However, getting a travel insurance quote when you are older can be more difficult than for those who are younger.

When agreeing to an insurance policy, insurers carefully weigh up how likely you are to make a claim and then price your policy accordingly – premiums tend to be higher when you are a higher “risk” to the insurer.

People over the age of 70 tend to be of higher risk to insurers because it is more common for them to have pre-existing medical conditions.

If a claim seems more likely, insurers will hike prices to accommodate. Other providers also have upper age limits on certain policies.

What does travel insurance for over 70s cover?

As over 70s are more likely to have pre-existing medical conditions and therefore at higher risk of needing medical assistance, travel insurance for this age group tends to be centred around medical and health cover.

A typical policy for an older traveller could include cover for any hospital fees, repatriation fees, and other emergency medical costs.

If you do have a pre-existing medical condition, it may also be a good idea to make sure any medical equipment that you need to travel with is covered by your insurance in case it is lost, stolen, or damaged.

You should also ensure your travel insurance covers the usual things that you’d expect, like lost or stolen belongings/luggage, trip delays, and cancellations.

Alicia Hempsted, insurance expert at MoneySuperMarket told MoneyWeek that over 70s insurance is “designed with the needs of older travellers in mind,” meaning policies often offer “benefits such as comprehensive medical cover, prescription protection, luggage insurance, and emergency assistance costs less than you expect”.

Alongside the usual areas of cover, it is wise to make sure that your insurance covers you for last-minute cancellations if you wake up on the day of your trip and find you are no longer able to go.

We look at eight things to check in your travel insurance in a separate article.

How much does over 70s travel insurance cost?

In general, getting travel insurance if you are over 70 tends to be quite a bit more expensive than getting insured when you are younger as insurers take on more risk.

The average premium for single trip travel insurance is significantly higher for people in their 70s, at £107.56, more than double the average premiums for those in their 60s (£52.93), data from MoneySuperMarket shows.

The table below shows the average travel insurance premiums for single trips, divided by age group.

Source: MoneySuperMarket, figures based on data gathered in the 12 months before 12/08/2025. Ages 80+ are excluded due to insufficient data.

After seeing how much premiums increase as you get older and become more likely to have a pre-existing medical condition, it may be tempting not to disclose these to your insurer, but it is incredibly important that you do.

Hempsted told MoneyWeek: “It is always important to disclose any pre-existing medical conditions, even if you are awaiting test results, as failure to do so could mean that should you need to make a claim, it may be denied.”

How to get cheaper travel insurance for over 70s

With travel insurance premiums being so much higher for people in their 70s, you might want to try to bring these costs down.

One way you can do this is by offering to pay a higher excess (the amount you pay if you make a successful claim) as the insurer may provide a cheaper quote if you do this.

However, make sure you can afford to pay the excess if you need to make a claim.

If you are a frequent traveller, you might find annual travel insurance cover is cheaper over the course of a year compared to multiple single-trip policies.

It may also be a good idea to find the best deal on your travel by using a comparison website, such as go.compare, MoneySuperMarket, and CompareTheMarket.

These work by taking your details then comparing quotes from hundreds of insurers to provide you with a list of the cheapest deals.

Hempsted at MoneySuperMarket told MoneyWeek: “If you’re over 70 and looking for travel insurance, you might find that a higher likelihood of pre-existing medical conditions or a higher risk of trip cancellations can influence policy costs, so it’s important to shop around to get the right cover at the best price.”

Things to bear in mind when buying over 70s travel insurance

To make sure you are getting a travel insurance policy that best fits your needs, Hempsted shared a list of questions to ask yourself before taking out a policy.

• Do you have enough medical cover for the countries you’ll visit?
• Have you declared any pre-existing medical conditions?
• Do you have enough cancellation cover for the total cost of your trip?
• Have you included any activities you’ll be doing, such as winter sports?
• Is the single-item limit on personal possessions enough to replace your valuables?
• Will you be able to afford your excess payment if you need to claim?
• Check if you need to have booked your return ticket before you travel.

Once you have made sure the policy accommodates all of your needs and provides you with the right amount of cover, you should be all set to enjoy your holiday without worry.

Thousands of property owners have claimed on their insurance for subsidence in the first half of the year, according to new figures, as record temperatures wreak havoc with building foundations.

Over the first six months of the year, insurers paid out £153 million to almost 9,000 households to help them recover from subsidence damage, the Association of British Insurers (ABI) said, with the average insurance payout per claim standing at £17,264.

Making a claim can send your insurance premiums higher. But there are ways to cut the cost of home insurance.

Subsidence occurs when the ground beneath a building sinks, pulling the property’s foundations down with it. It typically happens when soil loses moisture and contracts – often due to extended dry spells or the presence of trees and shrubs that draw water from the ground.

The ABI’s figures follow unusually high spring temperatures, with the Met Office confirming the UK experienced its warmest spring on record this year – with above-average temperatures across all four nations.

We look at the cost of air conditioning to help with the heat in a separate article.

Louise Clark, manager of general insurance policy at the ABI, said: “Climate change is significantly increasing the risk of subsidence in the UK, particularly in areas with clay-rich soils that sink and swell in response to changing moisture levels caused by hot temperatures.

"If you suspect your property has suffered from subsidence damage, contact your insurer as soon as possible. It’s exactly what your home insurance is there to cover.”

How to spot subsidence

When it comes to spotting subsidence, understanding the signs is key. These include:

• Distinctive diagonal cracks appearing at the edges of windows and doors, usually wider at the top than the bottom and around 3mm thick or thicker than a 10p coin.
• Doors or windows sticking for no reason, or closing easily in winter but not summer.
• Tearing wallpaper which is not caused by damp.

However research by LV General Insurance that quizzed 2,002 UK adults, including 1,318 homeowners, on their knowledge of subsidence found widespread confusion – 51% of homeowners don’t know what to look for when it comes to the common property problem.

While almost three quarters of people (71%) correctly identified large cracks in walls as a key sign of subsidence, almost a third (30%) of people incorrectly guessed tilting trees outside the home was an indicator.

The table below shows what percentage of people guessed which potential signs of subsidence – and if they were right or not.

Top tips to help prevent subsidence

There are some steps homeowners can take to prevent subsidence. These include:

• Pruning trees and large shrubs to prevent soil from drying out. Seek professional advice from a tree specialist if you need to.
• Check water pipes and guttering for leaks which can wash away or soften soil.
• Lay porous materials around the home, like gravel or grass, to allow water to drain naturally.

What type of damage can heatwaves inflict on UK homes?

Subsidence isn’t the only consequence of hot weather damage on our homes.

Liz Hunter, commercial director at MoneyExpert, said: “Generally, UK homes are designed to retain heat during cold, wet winters and aren’t well equipped for very high temperatures that we’re currently experiencing in the latest heatwave.”

The heat can inflict damage to your home in several ways beyond subsidence.

Damage to roofing and gutters

The intense sun and heat has the power to warp roofing materials, which causes tiles to crack or move. This can then lead to long term issues such as leaking roofs and drainage issues. Guttering, particularly uPVC, can be weakened by prolonged heat and sunlight, causing them to warp or become brittle.

Melted sealants and paint

Extreme, prolonged heat has the potential to soften or even melt window and door sealants, which can cause issues with leaks and the fit of your property's windows and doors. Exterior paint can also be affected, with the heat blistering paintwork on walls, windows, doors and other exterior surfaces.

Damage to pipes and plumbing

The heat could cause damage to your plumbing, particularly if it’s outside the home. The high temperatures can cause pipes to expand or deform, which could lead to leaks in the future.

Issues with condensation and mould

If the weather suddenly cools or turns wet after a heatwave, it can lead to excess moisture build-up. This can cause damp and mould in poorly ventilated properties.

Will my home insurance cover damage from extreme heat?

Most domestic buildings and contents insurance policies usually cover against extreme weather, including extreme heat, with some insurers paying for alternative accommodation in more severe cases.

That said, most outbuildings, including fences, garden sheds and gates, are usually excluded (unless your policy specifically states otherwise), so it’s worth getting additional cover if you don’t want to pay for any damage done to the outside of your home.

Hunter said: “Your policy will clearly set out what damage you’re insured for, and list any exclusions that apply. Most insurers define extreme weather in more detail in their policies and will let you know whether you’re covered or not.

“If there are unprecedented or unexpected weather conditions, some insurers may define these events as an ‘act of God’. This could leave you without cover and having to pay for the damage yourself.”

It’s important to look at the specific wording in your home insurance policy along with the terms and conditions, advised Hunter, “or speak with the insurer directly to see whether they cover your home for severe weather events, so you aren’t caught out if you need to claim in future”.

What to do if your home is damaged in an extreme weather event

1. Contact your insurance provider

As soon as you notice any damage following an extreme weather event and as soon as it’s safe to do so, you should contact your insurance provider to report any damage and begin the claims process. Many have 24-hour helplines, so you should be able to get help in an emergency.

2. Document and assess the damage

It’s important to document the damage by taking as many videos and pictures as possible of your home and your belongings. This acts as proof, particularly if you need emergency repairs, and may be needed by your insurance provider to start the claims process.

It’s important to also keep a record of any repair costs and any temporary accommodation costs too. Once you’ve made contact with your insurance provider, they may send a loss adjuster to assess the damage and take their own photos and videos.

3. Emergency repairs

To avoid further damage to your home and make your property safe, you can arrange to have emergency repairs carried out by a qualified professional. However, you’ll still need to contact your insurer in the meantime to let them know what’s happened, and whether you’ll be making a claim. Make sure you keep any receipts from any repair work as proof for the claim you’ll be making on your home insurance.

4. Keep detailed records

Try to maintain detailed records of all communication with your insurance provider and any tradespeople who may have completed emergency repairs, as well as a list of repair costs and, if needed, expenses related to temporary accommodation. You’ll want to make sure your insurance provider takes these into account when deciding how much to payout.

Things to be aware of

Bear in mind, you will still need to pay any excess if you claim on your home insurance damage following an extreme weather event, so it might be worth checking whether the cost of repairs is significantly more than the excess. It may not be worth going through your insurer if the damage won’t cost that much to fix.

Before going ahead with a claim, it’s also worth remembering that your premiums will most likely increase upon renewal of your policy.

Finally, if you’re not satisfied with the way a claim or complaint was handled by your insurer, then you can contact the Financial Ombudsman service.

Does your company need cyber insurance? While high-profile cyber attacks on firms such as Marks & Spencer generate most of the headlines, there is a much broader cyber crime epidemic going on. Around 42% of small and medium-sized enterprises (SMEs) in the UK have experienced a cyber attack or breach over the past 12 months. The impact can be devastating. Transport company KNP last month announced it was closing down after almost 160 years in business following a cyber attack that left it locked out of its own IT systems. The damage caused proved too much for the firm to recover from. Data from BT suggests the average cost of a serious breach to a small business is just short of £8,000, but in many cases, the bill will be substantially higher.

Moreover, while costs such as restoring systems and the interruption to business may be easy to quantify, additional expenses such as reputational damage can be large and unknowable. A data breach could also leave your firm vulnerable to sanctions from the Information Commissioner’s Office: it can fine businesses up to 4% of their global turnover for transgressions.

Consult a broker for cyber insurance

Cyber insurance offers valuable risk mitigation benefits.

Firstly, your insurer can offer practical advice and support that will enable your business to better protect itself from an attack through technology improvements and stronger security. If an attack does get through, your insurer will be able to help you manage the breach and get your SME back up and running more quickly. And it will also refund many of the costs you incur.

Still, cyber insurance is a fast-evolving market, and it’s important that SMEs understand what policies do and don’t cover before signing up. This is one area of the insurance industry where getting independent advice from a broker can be especially valuable. Most insurers will want to develop a detailed understanding of your SME before offering cover. They’ll work with you to conduct a risk assessment, aimed at identifying the type and potential cost of attacks you might face, as well as the quality of your existing defences. They will also want to know how well you’ve trained employees on cyber security.

This process can take some time, and the results of the assessment will have a direct impact on the cost of cover. But it can be a worthwhile exercise. Insurers will be able to suggest improvements you can make to your risk management processes; this will help you secure affordable cover but also enhance your firm’s cyber security. Make sure you understand exactly what insurance offers. For example, what support will your insurer provide immediately in the event of a cyber attack? What limits are there on payouts, both for the cost of the attack itself and associated losses such as business interruption? What threats are you covered for, and will this cover evolve as new threats emerge? Will you be covered for attacks that result from a mistake made by one of your employees?

Clearly, the price of insurance will be key too. It will depend on the nature of your business. Certain firms and industries handle more sensitive data and rely more heavily on technology systems, for example. However, one recent survey put the average cost of cyber insurance at between £500 and £3,500 a year for a small business with an annual turnover of less than £1 million. For businesses with revenues between £1 million and £10 million , that rose to £3,500 to £10,000 annually.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

The cost of car insurance is a regular gripe among drivers but research suggests premiums aren’t actually all going back into insurer profits.

While you may be trying to cut the costs of your car insurance, analysis by the Financial Conduct Authority (FCA) suggests that increases in the cost of motor claims are actually the main factor in car insurance premium hikes that have hit motorists in recent years.

The City watchdog launched a review of the car insurance sector amid concerns of the growth in premiums since the pandemic and through the cost of living crisis.

There are many factors that impact premiums, such as the day you purchase car insurance, and though the typical car insurance costs may have dropped in recent months, the average premium increased from £443 to £545 between 2019 and 2023 - a 23% jump.

The rise coincided with inflation hitting double digits in 2023, with higher energy bills also putting pressure on households.

But the FCA’s research has found that car insurers aren’t actually at fault and it is the cost of claims that has gone up, meaning customers are paying more in premiums for potential repairs.

Sarah Pritchard, deputy chief executive of the FCA, said: “Insurance provides peace of mind but people must be confident they can get a fair deal and be treated right when the worst happens.”

Are insurers profiting from car insurance premiums?

It is easy to blame your insurer when you receive a car insurance renewal.

The FCA has already introduced rules to stop insurers from favouring new customers over existing ones, while it is also important to shop around otherwise inertia can leave you paying more.

But the regulator’s research suggests some costs are simply outside an insurer’s control.

Just as consumers have been hit by rising prices, garages are also paying more for parts, labour, energy and more complex cars and supply chains.

The cost of hire vehicles, the number and cost of theft claims and uninsured drivers have also risen significantly, the FCA said.

For example, the Motor Insurers’ Bureau said the cost of claims associated with uninsured drivers has risen from £328 million in 2019 to £452 million in 2024.

Overall, the typical claim cost has increased by 37% between 2019 and 2023 to £3,293 on average.

It is up to insurers how much of this they pass on but ultimately it is the customer who pays for higher claims costs in their premiums.

There were a couple of areas where the FCA has raised concerns including on referral fees from credit hire firms and claims management companies, which it said have slowed down claims and increased costs.

The FCA also said some firms are making “much more money” than it costs to let people pay for insurance on a monthly basis, which it is exploring further for its next stage of the market study.

Pritchard added: “External cost pressures are primarily to blame for recent motor premium increases, not increased firm profits, but there is some more work to do on claims handling.

“That’s why we’re stepping up - making sure claims are handled promptly and fairly and pushing for a coordinated effort to tackle the root causes of rising motor premiums.

“A well-functioning insurance market helps consumers navigate their financial lives and supports growth by building people’s resilience to financial and personal shocks.”

Hannah Gurga, director general of the Association of British Insurers, said the FCA's findings confirm that record-breaking claims costs are behind recent increases in motor insurance premiums.

She added: "(The FCA) demonstrates that many of these cost pressures - such as rising vehicle repair costs, part shortages and increased thefts - stem from issues beyond the industry’s direct control, making collaboration essential to find sustainable, long-term solutions."

How to cut your car insurance costs

The FCA has suggested the government could help boost the supply of skilled labour to reduce repair delays and durations and labour costs and suggested there should be higher penalties for insured drivers.

There are steps that policyholders can take to cut their car insurance premiums such as shopping around, considering the type and level of cover you need or purchasing a vehicle in a lower tax bracket.

If your provider has ever rejected your home insurance claim, then it might have been due to one of five common reasons.

Home insurance is one of the five insurance policies that you need to have. Both buildings insurance and home contents insurance are common policies that can protect homeowners when disaster strikes – whether that be from freak weather, vandalism, or burglaries.

But despite the importance of home insurance, many households buy it once and then do not give it any further thought, relying on cover that may not actually help them in a real crisis.

This could be for a number of reasons, such as forgetting to update your details, falling foul of auto-renew, or scrimping out and getting the cheapest policy possible.

“People assume that if they’ve got a policy and they’ve paid their premiums, they’re covered,” says Craig Morgan, insurance expert at SJL Insurance Services.

But in reality, Morgan explains, insurance is full of terms and conditions, “and it’s often the small print that makes the biggest difference.

“There are cases where claims are reduced or rejected simply because the cover doesn’t match the property’s current rebuild cost, or because key details were never updated.

“The cover might have made sense five years ago, but life changes and insurance needs to keep up. Otherwise, it won’t be there when you need it most,” he concludes.

We look at the five most common home insurance mistakes that could cost you in a crisis, and how you can make sure you don’t get caught out.

The five most common reasons insurance doesn’t pay out – and how to avoid them

Letting policies auto-renew

When most people take out an insurance policy, it will typically be for a specified term, such as one year.

Once it comes to the end of your term, though, many policies will renew automatically, meaning that you aren’t able to adjust the details of your policy – this can cause problems if your circumstances change.

You don't necessarily have to have moved house for significant changes to have occurred which could be relevant to your home insurance.

Morgan explains that a lot can change in 12 months, ranging from home improvements to having new possessions, so letting your policy roll over without checking the details can leave you unknowingly exposed.

You could also be missing out on better deals on your home insurance if you don't regularly review your policy and reassess its place in the market.

We look at how to cut the cost of your home insurance in another article.

Being under-insured

A common mistake for people taking out home insurance is being inadvertently under-insured.

This can happen for a number of reasons, but the most common is that the policyholder got insured on their home years ago and has forgotten to update details about their abode.

Morgan urges policyholders to remember that getting an insurance payout is “not about what you paid for your home or contents, it’s what it would cost to replace everything today.”

In the event that you have to get your insurance policy to pay out, if you have not made sure that you are properly covered, your insurance provider may only pay out a portion of your claim.

Inflation, supply shortages, and rising construction costs have also meant that replacement values have soared, so being underinsured could mean you get much less than you expected even if your home insurer does pay out.

Forgetting to declare changes

When you take out an insurance policy, insurers base your premium on the information you provide at the time that you took out the policy.

As time goes by, though, you may want to make some changes in your home. For example, you may take in a lodger, convert your loft, or start a business from home.

Morgan explains that “from renting out a room to upgrading your kitchen, anything that affects the value or use of your home should be declared.”

This is because any out-of-date information has the potential to invalidate your claim entirely, so it is vital that you are diligent about keeping your details up-to-date with your insurance provider.

Missing extras

Your insurance policy may not include cover for extra things that go beyond core buildings insurance or contents insurance.

If this is the case for you and you have not noticed it, you could be caught out and not receive an insurance payout.

“Just because it’s important to you doesn’t mean it’s automatically included,” says Morgan, urging policyholders to ask providers what is and is not included.

Some common extras that are not included in some home insurance policies include: accidental damage, mobile phones, bicycles and flooding, among others.

Focussing only on price

With household budgets continuing to be stretched, it can be easy to take out a cheaper home insurance policy, especially when there are many more pressing things that this money could be used for.

However, taking out the cheapest policy available could come back to bite you in a time of crisis.

Though these policies have the merit of being inexpensive, they often come at the cost of scrimping on important protections that may have been removed or reduced.

While insurance isn’t the most exciting thing to spend your money on each month, it can be an important expense to make sure you aren’t caught out in the event of an emergency.

Perhaps the most common policy that comes to mind when thinking about insurance is car insurance as all drivers legally have to hold a policy to drive on the UK’s roads.

However, there are myriad other insurance policies that you could consider getting. Plans that cover your home or pets are quite common (and quite sensible) but some others can be a bit more obscure.

We look at the five insurance policies that you should have.

What insurance policies should I have?

Car insurance

Car insurance is mandatory if you are a motorist.

The cost of car insurance ballooned in recent years but has started to fall again, according to Go.Compare. The average cost of car insurance is now £416 – the lowest it has been since early 2023.

Ursula Gibbs, chief commercial officer at Compare the Market, said: "First things first, make sure you shop around and compare policies as this could save you hundreds of pounds each year.

"If you’ve not yet bought your car, or are considering an upgrade, it’s worth checking which insurance group a car is in before you buy it because this could bump up your premium."

We list 18 tips on how to cut your car insurance costs in a separate piece.

Every driver on a UK road must have at least third-party car insurance. This covers you if you damage somebody else’s car or if you injure somebody else, but it won’t cover any damage done to you.

The tier above third-party is called third-party, fire and theft. This tier covers third parties if you damage their cars or injure them, but also covers you if your car is stolen or damaged by fire.

However, most drivers opt for a higher level of coverage: comprehensive.

Comprehensive car insurance is by far the most widely used car insurance cover. It provides protection if damage is done to your car in a collision, as well as covering third-parties.

It depends on the specific plan that you take out, but most comprehensive car insurance covers accidental damage to your car, chips, scratches, dents, and vandalism.

Buildings insurance

While it is not a legal requirement, it may be wise for most consumers to take out a buildings insurance plan. Many mortgage providers will insist you insure your home to make sure their investment is protected. This way they will not lose cash if they repossess your home.

Buildings insurance covers you for the physical structure of your home. This includes things like the roof, walls, floors, etc.

In the event that the structure of your home is damaged, from things like flooding, fires, storms, or vandalism, your buildings insurance will cover some of the costs of repairing and rebuilding your home.

A buildings insurance plan can help you avoid getting caught out by the potentially enormous costs of repairing damage to your home.

Home contents insurance

Once a buildings insurance plan is sorted, the next thing most people should consider is a home contents insurance plan.

Unlike buildings insurance, which covers the physical structure of your home, contents insurance covers the items inside your home, like TVs, beds, kitchen appliances, and computers.

Because the items in your home are not what your mortgage provider has invested in, they may advise you to get it, but it is rarely a requirement in the mortgage agreement.

You could make a claim on your home contents insurance policy if your belongings are damaged or broken from events outside your control, like a fire, storm, or flood.

The average cost of home insurance (which includes both buildings insurance and contents insurance) is £232 a year, according to Go.Compare, but will differ according to the size of your home, the number of residents, its location, the year it was built, and other factors.

Gibbs, from Compare the Market, said: “Whether you own your home or rent it, it’s worth considering some form of home insurance. If you’re renting, then contents insurance will protect all your possessions, such as laptops, bikes, phones and televisions.

"If you own your home, then you’ll want to consider both contents and building insurance. Building insurance will protect you in the event of a fire, burst pipe or severe weather damage, where parts of the house may have to be rebuilt."

There are ways to cut the cost of your home insurance premium.

Travel insurance

The last thing holidaymakers may want to think about is what would happen if your suitcase is stolen, your trip is cancelled, or if you are involved in a medical emergency.

Nevertheless, it is important to plan for these eventualities to make sure that you won’t be caught out if they happen to you.

While the costs of having your suitcase stolen or needing to cancel your trip unexpectedly can be uncomfortably high, they pale in comparison to the potential expenses of a medical emergency, which can easily cost you thousands, if not tens of thousands of pounds.

For that extra peace of mind, make sure you choose the right travel insurance when you go abroad.

The average cost of travel insurance is around £25 for a single trip policy, according to Go.Compare, but can increase depending on your personal circumstances, age, the places you are visiting, and type of activity that you expect to do.

Gibbs warns against skipping travel insurance. She said: "If you don’t have it and something goes wrong – for example, if your trip is cancelled, you need medical treatment while you’re out there, or your belongings are stolen – you’ll need to pay for this yourself.

"Prices for travel insurance can vary considerably, so do your research and take out your policy before you travel, ideally as soon as you book your trip, so you’re covered for any unforeseen events, like cancellations.”

Pet insurance

If you are lucky enough to have a furry friend in your life, then it could be a good idea to take out a pet insurance plan.

If your pet falls ill or gets injured, a trip to the vet could potentially cost a hefty sum of money, but if you take out a pet insurance plan, the cost of treatment should be significantly reduced.

As well as medical circumstances, some providers will pay out if your pet damages someone else’s property.

The average cost of pet insurance differs depending on what type of animal you have. It is around £162 a year for a pedigree dog, and £136 for a pedigree cat, according to Go.Compare.

For dogs in particular the cost of insurance can become more expensive depending on the breed you have – for example the Dogue de Bordeaux is the most expensive dog to insure, costing around £334, while the cheapest breed is a Jack Russell, costing just £82.

Questions are being raised about “outdated” age limits on income protection which could leave older workers and entrepreneurs exposed to financial risks.

Currently, the maximum age you can take out most income protection policies is 59, but the cover can run until age 70.

Insurance brokers claim these age limits are outdated, especially with the state pension age rising and people having to work longer to fund their retirement.

It comes as record numbers of over-60s are now self-employed, according to data from the Office for National Statistics (ONS), while borrowers are also taking mortgages out for longer.

Brokers say income protection policies should reflect this, yet many older people now running their own businesses technically would be rejected for income protection from age 59, meaning they wouldn’t be covered if they fall ill and can no longer work.

Rob Peters, principal at Simple Fast Mortgages, said: "This is outdated and the industry needs to wake up. We're telling people to work longer, pay tax longer, take mortgages later, but we don’t give them the tools to protect their income at the very time they may need it most. If someone’s earning a wage, they should be able to insure it. Blanket age limits are lazy underwriting."

Joe Farmer, a protection adviser at When The Bank Says No, warns that the income protection cap leaves older people exposed.

He said: "We speak to clients every day who are working well into their 60s, some even into their 70s, and many of them are still financially responsible for things like mortgages or supporting family.

“If they’re earning, it makes sense they should have the option to protect that income, regardless of their age. Of course, health plays a big role in underwriting, but we should also be taking into account people’s working lives and financial responsibilities.

"With the state pension age increasing and people living and working longer, this is an area that really needs more attention from the industry.”

What is income protection?

Income protection is an insurance product that supports you financially if you are unable to work due to illness or injury. It is particularly useful if you need to cover mortgage payments.

Payouts typically range from 50% to 70% of your salary and will last until you return to work.

Like any insurance product, you will need to pay a premium that is calculated based on your age and other factors such as your occupation.

Ultimately, the older you are, the higher your premium as insurers will deem you at more risk of getting ill or injured.

Income protection providers have decided that 59 is the maximum age that someone can take out a policy as they believe there are higher risks after this that people won’t return to work.

Should the income protection age cap be lifted?

An age limit of 59 seems outdated when the state pension age is 66 and rising, it has been claimed.

ONS data shows the number of self-employed individuals aged 60 and older hit a record 991,432 in 2023, while 35% of new businesses in the UK are now started by people aged 50 and above, according to Enterprise Nation.

Additionally, more people are now taking out mortgages that last into retirement to cope with higher interest rates.

Farmer added: “If they’re earning, it makes sense they should have the option to protect that income, regardless of their age. Of course, health plays a big role in underwriting, but we should also be taking into account people’s working lives and financial responsibilities.

“With the state pension age increasing and people living and working longer, this is an area that really needs more attention from the industry.”

Farmer's view is backed by other brokers.

David Stirling, director at Mint Mortgages & Protection, said: “Insurers have valid concerns at the likelihood of older claimants actually returning to work if they are unable to work due to accident or sickness.

"A short-term income protection product, specifically for the over-60s, could offer a pragmatic balance for the modern workforce, who are often taking mortgages and working into later life.”

Dave Corbett, head of protection at Protection 1st, said the industry needs to create products that are more in tune with modern working practices.

He said: “As mortgage terms run longer, and clients get on the property ladder later in life, income protection cover really needs to be available to those over 60.

"The lucky ones could maybe access their pension pots through early retirement on grounds of ill health, but planning is key here and advice should be taken. Income drives all outcomes and the bills don't stop if you are ill, no matter what your age, so a fundamental re-think here is needed.”

Peters added: "A one or two year monthly benefit policy might be the bridge many people need between illness and retirement. There’s a gap in the market, and a chance for someone to step up and offer a smart, pragmatic solution."

Roy McLoughlin, a member of the Protection Distributors Group, said there are opportunities for providers to develop new products but also for financial advisers.

He told MoneyWeek: “Traditionally a lot of income protection was written to age 55 or 60 but people are working longer now.

“There are concerns with how society is changing that people should still be able to take out insurance.

“There is a positive side that financial advisers should be considering longer term products with their clients.”

There does seem to be recognition in the industry that changes are needed.

Vicky Churcher, executive director of the Income Protection Task Force, which works with providers and brokers to raise awareness and boost sales of income protection across the UK, said the age cap is an area the group is looking at.

She told MoneyWeek: “In an ideal world, income protection policies would not be constrained by age limits, particularly as more people continue working well into their 70s.

“However, this is a complex issue for insurers, who must strike a careful balance between offering a high-quality product and maintaining affordability for consumers.

“At the IPTF, we recognise that current income protection products could be improved in several areas to better meet the needs of today’s workforce and enhance the overall financial resilience of individuals.”

Household names have secured the top spots in the nation’s hearts as the most trusted insurers, new research found, with lesser known challengers failing to convince the public.

Home, travel, car and pet insurers were weighed and measured by consumer rights group Fairer Finance, and ranked according to how much faith people had in them.

A poll of 10,000 consumers found trust in the insurance industry overall has dropped to its lowest level in four years, despite recent falls in home and car insurance premiums.

Travel insurance remains the least trusted insurance sector, as satisfaction scores fell across the board for price, value, and customer service, with all of the 10 largest providers experiencing a drop in perceived value for money.

James Daley, managing director at Fairer Finance, said: “Falling premiums aren’t enough to restore public trust in insurers, especially when claims experience and transparency continue to lag.

“Our latest results underline the fact that trust is fragile, and once lost, it’s not easily regained.”

Which is the most trusted car insurer?

NFU Mutual is the most trusted car insurer, the survey found. NFU performs well with claim satisfaction scores among the large car insurers, which no doubt correlates with its high trust level.

Customers also reported a very positive view of NFU's communication and customer service, and they also handle complaints very well compared to others.

On the flipside, Go Skippy has been deemed to be fairly bad across the board for digital capability, value and claims satisfaction, though not right at the bottom for any of them, Fairer Finance said.

Which is the most trusted home insurer?

Ecclesiastical came out top for most trusted insurer for home insurance (though NFU Mutual did well here too).

Ecclesiastical is considered to be very good value for money. This metric cost Intelligent Insurance, however, which was found to be very bad value for money, sending it to the bottom of the ranking.

Which is the most trusted travel insurer?

In travel, M&S has very high claim satisfaction and customers are more satisfied with their value for money than most travel insurance providers.

At the other end of the scale, GoodToGo Insurance was found to have very low value for money scores, which hurt its overall ranking.

Rising prices appear to be harming customers' perceptions of value in travel insurance and potentially driving a decrease in consumer trust.

Which is the most trusted pet insurer?

PDSA takes the top spot for pet insurance, leading for its value for money and claims satisfaction scores.

Pet-insurance.co.uk, on the other hand, scored very badly on value for money and digital capability.

Overall, claims satisfaction is highest in pet insurance (58.61%), followed by car insurance (56.55%) and lower in home insurance (52.56%) and travel insurance (49.19%), Fairer Finance found.

Fairer Finance’s Daley said: “The insurance sector is now firmly in the regulator’s spotlight – and needs to step up to the challenge of closing the expectation gap. Too many consumers are buying policies without understanding where the limitations of their cover are.

“Insurers, brokers and price comparison sites need to work together to help consumers understand what they’re buying and, more importantly, what they’re not buying.”

GoSkippy, Intelligent Insurance, GoodToGo Insurance and Pet-Insurance.co.uk have been contacted for comment.

Insurance is probably the least exciting but most crucial sector in the world. From the food we eat to the communication satellites that form the backbone of communications in our 21st-century world, the insurance industry touches every part of the global economy, and without it, we would be in a very different place.

Most people are familiar with the basics. Car insurance, for example, is a legal requirement in the UK, so anyone who drives or has driven will have some understanding of how this market works. The same applies to anyone who has bought a home with a mortgage. Banks usually require home insurance before lending on a property. These are two excellent examples of how insurance helps lubricate the global economy. In both cases, the policyholder is offloading the risk of a significant loss onto an insurance company for a small up-front payment – an insurance premium.

A significant amount of work is required to calculate insurance premiums. The premium figure is the result of hundreds or thousands of data points, looking at everything from past weather trends to crime rates in the local area. It also incorporates the cost of operating for the insurance company, broker commissions, reinsurance commissions and potential investment returns (more on that later).

The whole concept of insurance only works if the insurer is accurately pricing the risks it is underwriting. Insurers such as Admiral (LSE: ADM) write millions of different policies every year, knowing all too well that a certain percentage of these policies will result in a significant claim or loss, such as a significant car accident involving multiple vehicles. However, because millions of different customers are contributing to the same pool, the risk of a substantial loss is spread across the portfolio. If the company has done its sums right, it should be able to meet the claims when they arise and still make a profit.

How insurers offload risk

The key principles of insurance are exactly the same for the giant oil rigs in the North Sea, the cargo ships that bring goods from China, rockets that carry satellites into space and the cranes that help build infrastructure. In all of these cases, risk can be offloaded to a third party, freeing up capital for the oil rig, cargo ship, rocket or crane owner. It would be virtually impossible for these firms to keep enough cash on hand to meet all potential liabilities in the event of a disaster.

BP found this out in the years after the Deepwater Horizon oil spill. The company had chosen to self-insure its drilling activities in the Gulf of Mexico in an effort to reduce costs. It originally budgeted around $100 million for drilling the Macondo oil well, which was expected to hold about 50 million barrels of oil. By deciding to self-insure rather than contract out the risk by acquiring insurance policies, the company would certainly save money, and had done so before. As one of the world’s largest oil and gas companies, BP knew what it was doing. But insurance is required for the unexpected, not the expected, and what happened next was unexpected. Deepwater Horizon exploded, killing 11 rig workers and kicking off the beginning of what has become the largest oil-related environmental disaster in history. The ultimate cost of the disaster to the company, including all settlements and penalties, has been pegged at roughly $65 billion. The right insurance policies could have helped BP offload some of this risk.

A total of $65 billion would have been difficult to absorb even for the largest insurers in the world. That’s where reinsurance and retrocession insurance come into play. Both types of insurance help spread the risk across the insurance industry. For example, an insurer might underwrite $100 million a year and reinsure $80 million of that risk with a reinsurer, or a panel of reinsurers. The reinsurers may then decide to keep a percentage of this risk and shift the rest onto another party, so ultimately the risk is spread across multiple companies.

A key metric in the insurance industry is the combined ratio, which gives a valuable insight into a company’s performance. A combined ratio is composed of several factors. On one side of the equation, we have costs, such as the amount of money the company is paying out in claims every year, the cost of servicing those claims and finding new customers. These are balanced against the income received from premiums. If the company is receiving more money in premiums than it is paying out in claims, the ratio of premiums to costs would be below 100%. But if the business is paying out more in claims than it’s receiving in premiums, the combined ratio would exceed 100%.

A combined ratio above 100% indicates that a company is not generating a profit from underwriting insurance. This isn’t a terminal indicator. In fact, many insurance companies can and do consistently report combined ratios more than 100%. It’s especially common in periods of significant volatility and unpredictability. Still, if a business is consistently reporting a combined ratio of more than 100%, it can indicate a lack of care and attention with underwriting.

A company’s investment portfolio can help cover underwriting losses if the combined ratio exceeds 100%. Every insurance group will have a large investment portfolio to backstop underwriting activity and provide capital for unforeseen losses. Insurers generally have to report this solvency every quarter, which shows the size of the investment portfolio compared to potential underwriting losses. Most insurance companies tend to invest in risk-free or low-risk assets such as government debt and corporate bonds. These generate a steady and predictable stream of income every year without much risk of significant capital loss. The income also helps paper over the cracks when combined ratios exceed 100%. An investment portfolio today would be expected to achieve a return of about 4% to 5% a year. That means the company can have a combined ratio of 105%, losing money on the underwriting side of the business but making money from its investments, and still record an overall profit.

A big shift in the insurance sector

There are four main sectors in the global insurance market. There’s life insurance (which deserves its own feature), property and casualty (P&C) insurance, health insurance and reinsurance. The P&C market is the one most consumers will be familiar with. P&C covers car, home, business and other day-to-day risks as well as speciality risks, such as marine, aviation, energy and political risk insurance, often requiring specialised underwriting expertise. Of the estimated $7.7 trillion in gross written premiums (GWP) the industry is expected to write in 2025, about 40% will come from life insurance, roughly 10% from reinsurance, 20% from health (two-thirds of which will come from the US) and the balance in P&C.

Perhaps unsurprisingly, the US is the world’s largest insurance market. Based on 2022 total premium volume data from Swiss Re, the US was the world’s largest insurance market by a substantial margin, accounting for 43.7% of global premiums. China sat in second position with a 10.3% share, followed by the UK (5.4%), Japan (5.0%) and France (3.9%). The top 20 markets collectively represented 91% of global premiums in 2022.

Over the past five years, the insurance industry has undergone one of the most significant shifts in profitability seen in recent memory, driven by a confluence of factors. The shift really began in 2017, when global insured losses from catastrophic events hit $144 billion, the highest-ever recorded in a single year. The biggest losses came from three hurricanes – Harvey, Irma and Maria – that struck the US and the Caribbean in quick succession. The losses occurred after a period of relative stability for the industry, which had begun to take that stability for granted. As a result, many companies hadn’t priced their risks correctly and ended up taking huge underwriting losses on the catastrophes.

Most P&C and reinsurance contracts are so-called short-tail, and are renegotiated every year, giving insurers the opportunity to re-price risk every 12 months. Companies immediately started to re-price risk, but then in 2020, the pandemic hit. With the world stuck at home, 2020 and 2021 were good, but not great, years for the market. But in 2022, as the world reopened, losses started to grow. Insurers were hit by a triple whammy in the years immediately following the Covid lockdowns. When the world reopened, accidents surged and inflation took off, so companies had to deal with both more claims and a higher cost of each claim. At the same time, interest rates were at a record low, so income from investments didn’t fill the gap.

Companies reacted quickly to re-price risk. In the US, P&C premium growth hit 9.4% in 2021, 9.8% in 2022, and 10.5% in 2023. This “hard market” phase, where insurers have increased prices substantially to offset rising claims costs resulting from economic inflation, social inflation (the increase in P&C insurance-claims costs beyond what can be attributed to economic factors), and losses from catastrophes, has continued into 2024 and 2025, with regions most at risk experiencing premium growth of 20% or more. Rising rates took some time to filter through to companies’ bottom lines, but in 2024 the impact started to show through. In the US P&C market, the industry combined ratio rose to 102.7% in 2022 from 99.7% in 2021, and ticked down to 101.8% in 2023. In 2024, the combined ratio improved dramatically to 96.4% in 2024. Globally, Swiss Re estimated the P&C combined ratio improved to 98% in 2024 from 102% in 2023 and an average of more than 100% in 2020, 2021 and 2022.

The reinsurance industry also adjusted quickly to the changing environment. Reinsurers tend to bear the brunt of large losses from catastrophes, and losses from these events have jumped since 2020. Prior to the pandemic, annual insured losses from catastrophes rarely exceeded the $10 billion mark. Last year, according to Gallagher Re’s 2025 Natural Catastrophe and Climate Report, losses topped $154 billion and the average annual loss from natural catastrophes from 2017 to 2024 has topped $146 billion. The ten-year average is $12 billion.

Reinsurance rates have adjusted to this new normal. Despite some softening coming into 2025 (quickly reversed after the California wildfires), the Guy Carpenter Index of global property catastrophe reinsurance pricing remains up by 60% since its last low in 2017, having risen each year until the January 2025 renewal season. According to Gallagher Re’s in-depth analysis of a subset of 16 reinsurers, these rate hikes have helped push the average combined ratio down to 86.8% in 2024, from 87.3% in 2023. Higher rates have also made the sector more resilient to increasing losses. “Assuming a ‘normal’ level of natural catastrophe losses, we expect an underlying return on equity (ROE) of around 15% and a headline ROE of approximately 18%-19%” for the reinsurance sector, Gallagher Re noted in its annual reinsurance report. In the P&C market, too, ROE figures are expected to jump. Swiss Re forecasts global P&C industry ROE for key markets to reach approximately 10% in 2024, 2025, and 2026, a significant jump from around 5%-6% in 2022-2023.

Insurers’ bottom lines have also been helped by higher interest rates. Companies are now earning much higher returns on investment portfolios, up from about 1% before and during the pandemic, to 3.6% in 2024 and 3.9% in 2025 for the P&C industry, according to Swiss Re forecasts. As insurers tend to stagger the duration of the bonds in their portfolios, it has taken some time for the higher rates to filter through, but now the firms are really starting to feel the benefits of higher rates.

Best buys in the insurance sector

One of the best-performing insurers that’s benefiting from all of the trends outlined above is the US giant Chubb (NYSE: CB). A primarily North American-focused P&C insurer, the company’s core operating profit has broken records every year since 2022. Net premium growth has been driven by strong pricing and growth in commercial lines, as well as in consumer lines globally. Global net written premiums across the group increased 10% in 2023 and 9.6% in 2024. However, the firm’s key differentiator is its industry-leading P&C combined ratio. It reported a combined ratio of 86.6% in 2024, 86.5% in 2023, 87.6% in 2022, 89.1% in 2021 and 96.1% in 2020 – a five-year average of 89.2%, compared with the US P&C industry average of 99.7%. Combined with increased investment income, that meant the firm could report an ROE of 13.9% for 2024.

Chubb is one of the world’s largest pure-play publicly traded insurance companies. Berkshire Hathaway Inc (NYSE: BRK-B) is the largest and deals predominantly with reinsurance at the holding company level. Its subsidiaries, primarily GEICO, offer consumer-focused P&C policies. GEICO competes mainly with State Farm and Progressive, the latter of which is the only large listed player.

Progressive (NYSE: PGR), which specialises in car and truck insurance, reported a 19% jump in fourth-quarter income at the end of last year. Net income for the year doubled, as the combined ratio for the year came in at 88.8%, including a 3.6-point contribution from net catastrophe losses. Overall net personal line premiums rose 23%. At the end of the first quarter of 2025, Progressive had 35.1 million personal insurance policies in force, 18% higher than a year earlier.

Chubb’s peer, Travelers (NYSE: TRV), highlighted the trends shaping the industry in its first-quarter results call. The company more than doubled its earnings expectations and said the growth was driven by three factors: a “terrific” 79.9% underlying combined ratio in personal lines; a 2.9 percentage point year-on-year improvement in its overall combined ratio; and pricing up in all lines except workers’ compensation.

Beazley (LSE: BEZ) and Hiscox (LSE: HSX) have exposure to P&C, speciality and reinsurance, focused mainly on the Lloyd’s of London insurance market, which gives them an edge. In particular, they’ve carved out a niche in the speciality insurance market, where there’s far less competition than the standard global P&C market. Skilled and conservative underwriting, combined with rate increases, have helped both firms recover from combined ratios of over 100% in 2020 to 79% for Beazley in 2024 and 89.2% for Hiscox on an undiscounted basis. ROE last year was 27% and 19.8%, respectively. Both celebrated their strong results last year by launching new buybacks and hiking dividends. Following its 2024 results, Beazley launched a $500 million share buyback, and Hiscox outlined plans to buy back $175 million in shares.

Outside the P&C space, Swiss Re (Zurich: SREN), the world’s second-largest reinsurer (Berkshire is the largest on a market capitalisation basis), has used the firming of rates over the past five years to put past errors behind it. It has addressed US liability reserving concerns, and management has outlined a plan to surpass Munich Re (Frankfurt: MUV2), the global number one in reinsurance. Munich is well-placed to capitalise on further strengthening in reinsurance pricing, but has historically been the go-to reinsurance stock for investors, so it tends to trade at a slight premium to the rest of the sector. Peer Hannover Re (Frankfurt: HNR1) offers similar growth potential to Swiss with a middle-of-the-pack valuation.

Allianz (Frankfurt: ALVE) and Axa (Paris: CS) are best known for their insurance businesses, but they offer a wide range of financial services products. Both have adopted aggressive M&A strategies, boosting their presence in sectors such as asset management and life insurance. Still, a lack of specialisation is evident in their combined ratios. Axa reported a P&C combined ratio of 91% for 2024, and Allianz reported a combined ratio of 93.4%. However, diversification does provide some cushion throughout the insurance cycle.

Aviva (LSE: AV) has carved out a niche for itself in the UK insurance market, and recently agreed to buy Direct Line to bulk up its presence in motor insurance. Across its Canadian and UK general insurance businesses, the group reported an undiscounted combined ratio of 94.9% in the UK and 98.5% in Canada last year. Overall, general insurance premiums rose 14% and the group reported an undiscounted combined ratio of 96.3%. Contributions from the group’s life insurance and retirement savings arms helped it to a rise in operating profit of 20% to £1.77 billion.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Travel insurance might seem like an unnecessary expense, but heading abroad uncovered can take a toll on your finances.

Data from travel association ABTA published in May revealed a quarter of those who holidayed abroad in the previous 12 months went without insurance.

It found travellers aged 25-34 were the worst culprits, with two in five admitting they went on at least one trip uninsured in the past year.

The main reason people gave for not taking out a policy was that they were willing to take the risk, with 28% of those surveyed giving this response.

However, the average travel insurance medical claim was worth £1,528 in 2024, according to the Association of British Insurers (ABI), with one case costing a huge £1 million.

In total, ABI members paid out £472 million across more than 500,000 claims in 2024.

So while you might think you’re the type to not find themselves in trouble abroad, taking out a policy will shield you from costly accidents and mishaps.

Fraser Lyall, policy adviser for General Insurance at the ABI, said: “While suncream and passports will certainly be necessary, travel insurance is one other essential that shouldn’t be overlooked.

“Travel insurance can offer you peace of mind, knowing that you’re covered for things like emergency medical care should you fall ill or suffer an injury abroad.”

Why is travel insurance important, what does it cover and when is it most important to take it out though? Here’s everything you need to know.

Why is travel insurance important?

Travel insurance is important as it protects against unexpected costs on a trip or holiday.

Securing travel insurance, often for a small upfront cost, is considered a smart move as you could save thousands of pounds in the event of an emergency.

What does travel insurance cover?

Travel insurance covers issues such as medical expenses, trip cancellations or delays, and lost or stolen baggage. Holidaymakers can add on optional extras, usually at an additional cost, for example gadget protection.

Make sure you check policy exclusions, as different insurance providers will have different rules.

There are some instances where you won't be covered by travel insurance.

For example, natural disasters such as hurricanes, floods or storms are not typically included in travel insurance as standard. However, some providers will offer this type of cover for an extra fee.

Matt Sanders, expert at Go.Compare travel insurance, said: “Generally speaking, travel insurance provides you with a financial safety net if things go wrong on your holiday.

“It covers common risks such as an injury or illness that might mean you have to seek medical help or even cancel your trip, your luggage getting lost in transit, or a medical emergency while you’re away.

“Some policies also include cover for flight delays, missed connections, or unexpected events like natural disasters. But you should always read the details of a policy to see exactly what it covers.”

When do you need travel insurance and is it worth it??

While travel insurance is likely to be a good idea, it may not be essential for every trip. But in certain instances, travel insurance could be well worth it.

Travelling abroad, especially with prepaid trips booked, can come with the risks of unforeseen circumstances. As such, travel insurance protects against cancellations in events out of your control.

For the adventurous at heart, you may need to get specialised cover as your travel insurance policy might not cover certain activities.

Skiing, scuba diving, hiking or bungee jumping carry their own risks, particularly in more remote locations, and this coverage can be of assistance in a worst case scenario of injury.

Sadly, unrest is continuing across the world, so for countries where the political or economic situation is volatile, travel insurance is likely to be worth it in case you have to cancel your plans, or need to leave urgently once you get there.

Many people will be travelling to capture the best moments of their trip with a camera, but this, and valuable possessions like it, should be protected. Those carrying valuable items can benefit from travel insurance as it can cover loss or theft.

Finally, if you are planning to visit multiple destinations on your journey, travel insurance could be a key way of keeping unexpected costs down. Flight delays and cancellations in particular can prove costly, so if you do miss your connection, travel insurance is worth it to recover costs.

How much is travel insurance?

The average cost of a single-trip policy is £25, figures from Go.Compare show. This rises to £67 for those taking out annual multi-trip insurance. Backpackers insurance can be even higher at an average of £177.

The cost of your travel insurance will ultimately depend on a number of factors, including the destination, length of trip and any pre-existing medical conditions.

Is it worth paying excess on travel insurance?

Excess is a fixed amount you will pay towards a travel insurance claim before the insurer covers the rest - and some will be wondering whether this part of travel insurance is worth it.

When taking out travel insurance, there is often a choice to be made. Either you can pay a higher premium for zero excess, or a lower premium with excess fees on claims.

Choosing a travel insurance policy with excess can lower the upfront cost for the policyholder, but can also reduce your payout if you need to make a claim.

Excess can be worthwhile, for example, on low-risk trips with a minimal risk, or where small claims against the policy are unlikely. However, there is one major consideration to bear in mind when thinking about excess.

Sanders, from Go.Compare, said: “Most travel insurance policies will already include an excess, the amount you pay towards any claim. Choosing a higher excess can reduce your premium, but it also means you’ll pay more initially if something goes wrong.

“If you want more comprehensive peace of mind, opting for a lower or zero-excess policy might be worth the slightly higher cost.”

Do I need travel insurance if I have a GHIC or EHIC?

A European Health Insurance Card (EHIC) is the pre-Brexit predecessor to the Global Health Insurance Card (GHIC).

If you have an existing EHIC, you can continue to use it abroad until it expires, after which you need to apply for a GHIC.

A GHIC is free to apply for and lasts up to five years. You can apply for one through the NHS website.

Both cards can be used to cover medical care through state healthcare systems abroad, across most European countries. This includes routine maternity care.

However, they won’t cover the cost of repatriation flights, treatment in private medical facilities or ski or mountain rescues.

Therefore, it’s still worth taking out travel insurance when going abroad to supplement the use of these cards.

Greg Wilson, chief executive officer and travel insurance expert at Quotezone.co.uk, said: “Some insurers may waive any excess on medical treatment if you use an EHIC or GHIC but you need to check the terms of the policy.”

How do I make a claim on my travel insurance?

To make a claim on travel insurance, first review the terms of your policy. You should subsequently gather the required evidence and documentation that may support your claim. Details such as receipts, booking references, proof of cancellation, or police reports in the case of theft or loss could assist.

Many travel insurance providers want their policyholders to contact them as soon as possible following issues or incidents, and this is particularly true in cases of medical emergencies. To help in making a successful claim, make note of your insurance provider's helpline.

Next, complete a claim form with accurate and relevant details. A prompt submission will decrease the likelihood of a claim being rejected.

Processing a travel insurance claim may not be instantaneous, but being proactive is recommended. Some insurers may require more details, so be prepared to provide further information in the case of a follow up.

When is the best time to book travel insurance?

It is worth buying travel insurance as soon as you have booked a trip. The sooner a travel insurance policy is taken out after a trip is booked, the sooner you will be able to have the protection against any issues that may force you to change your plans or cancel your holiday altogether.

Procrastination when it comes to booking travel insurance is generally not a good idea.

This is because if you are purchasing single trip travel insurance, the cover will last from the day the policy is bought to the date you return home

This means if there are any unforeseen circumstances, such as medical emergencies, accidents, a death in the family, or a travel provider going bankrupt, before a trip, they could be covered by your policy.

Greg Wilson, from Quotezone.co.uk, says: “Many travellers choose the date they’re due to set off on holiday as the start date for their travel insurance policy, but that usually isn’t the best plan.

“Buying your travel insurance when you book your holiday ensures you’re covered for any events that might prevent you from going away in the first place.”

An annual, multi-trip policy could be suitable for those who are travelling throughout the year, even if at first glance it may seem expensive.

"This type of policy covers all your trips for the year, including UK getaways, and ensures you're protected from the moment you book,” adds Andy McDonald, underwriting manager at Norton Insurance Brokers.

“It works out to be more cost-effective than buying separate policies, and saves you the hassle of sorting insurance every time you travel.”

Households are braced for damage to their homes and gardens amid the latest storm to hit the UK.

This could cause yet another rise in home insurance claims and payouts but there is a storm definition that insurers can use to reject claims – the 55mph rule.

It comes as the Met Office has issued weather warnings for northwestern parts as Storm Éowyn batters the UK.

Gusts of more than 90mph have been recorded in Northern Ireland and exposed locations of Wales. It is the fifth major storm since October 2024.

The extreme weather is expected to cause travel delays and many households will rely on home insurance to cover any damage caused by a storm.

Data from the Association of British Insurers (ABI) showed claims for damage to homes from storms, heavy rain and frozen pipes reached £136 million in the third quarter of 2024, the sixth consecutive quarter that weather-related claims have been above £100 million.

Most insurance policies will cover storm damage on a property, as long as the structure such as the roof and walls have been kept in good condition.

There are some areas of damage that won’t be covered and much will depend on the policy wording.

For example, some insurers will cover storm damage to a fence but others may exclude weather-related incidents or you may need to pay extra. However, you may not get any protection at all if the winds where you live aren’t deemed powerful enough.

This is because a storm is only technically declared when there are wind speeds with gusts of at least 48 knots or 55mph where you live.

The Financial Ombudsman Service said it sees a range of complaints following storm damage including what a storm actually is and the cause of the damage.

What is the 55mph rule?

Insurers follow a set definition of a storm based on the minimum wind speeds that could cause damage to a well-maintained property.

Otherwise, they would risk paying out for even the most minor bits of damage and other policyholders would suffer from higher premiums.

A storm is defined as wind speeds with gusts of at least 48 knots - 55mph.

It could also be torrential rainfall at a rate of at least 25mm per hour or snow to a depth of at least one foot in 24 hours.

Other definitions include hail of such intensity that it causes damage to hard surfaces or breaks glass and winds of the equivalent to Storm Force 10 on the Beaufort Scale. 

This can cause issues though as winds won’t hit all parts of the UK at the same speed at the same time.

An insurer will check the wind speed for your area and may reject a claim if its data shows the wind speed where you lived was below the 55mph definition.

Do insurers payout for storm damage?

Insurers still have a track record of paying out for storm damage.

Companies paid out an estimated £560 million to help customers following Storms Babet, Ciaran and Debi in 2023.

Payouts for the first three quarters of 2024 hit a record £4.1 billion.

Jonathan Fong, manager of general insurance policy at the ABI, said: “As the first named storm of 2025 approaches, many homes and businesses across the country will be braced for potential disruption and damage.

“But we’d like to reassure people that insurers expect bad weather to strike at any time and are geared up to deal with events like this. Their priority will be to help affected customers recover as quickly as possible.”

Fong suggests households should store and secure any items in the garden that can easily be blown away to help limit damage, adding: “If flooding is expected, assemble a flood kit and move any valuables or sentimental items upstairs. If you do suffer damage to your property or vehicle, contact your insurer as soon as you can for help and advice.”

There have been cases though where insurers have refused to payout as the wind speed wasn’t deemed to be strong enough.

Read your policy's terms and conditions to ensure that the level of cover meets your needs and you can speak to your insurer if you have any questions.

You can ask your insurer to send a surveyor to assess the damage or can file a complaint if you are unhappy.

Your insurer needs to respond within eight weeks.

If the issue isn’t resolved, you can also take your complaint to the Financial Ombudsman Service.

A spokesperson said: “Storms can wreak havoc on your property, and it can be overwhelming to deal with the damage caused. During these difficult times, we expect insurers to treat consumers fairly and settle claims without unnecessary delays.

‘If a consumer feels unhappy with the service provided by their insurer, they should firstly raise an official complaint with the firm about the issue. If it hasn’t been resolved to their satisfaction or they don't feel they've been treated fairly, they should contact our free, independent service and we'll see if we can help. Getting a fair answer is free and easy.”

A good piece of advice for investors in general is to avoid the motor insurance industry. It has a terrible record when it comes to making money. Since 2008, the UK motor insurance industry has reported an average combined ratio of 104%.

A combined ratio is a key metric of profitability for the insurance sector. It tells us how much a company pays out in insurance claims compared with how much it receives from premiums. If the ratio is consistently above 100%, that’s not a good sign, as it means the company is consistently losing money on an underwriting (pure insurance) basis.

However, there are some gems in the sector – businesses that are very picky about whom they choose to insure. Admiral (LSE: ADM) is one of my favourite plays in the sector due to its diversified and international business model. Sabre Insurance (LSE: SBRE) had its issues amid a tough claims environment in 2023. A little over a year later, Sabre seems out of the woods, although the market does not seem to understand the potential opportunity.

Sabre pushes through a tough industry

Unlike Admiral, a mass-market insurance group offering everything from car to home and travel insurance to personal loans, Sabre has a more focused business model. The company has three main business divisions: motor, motorcycle and taxi insurance. It provides insurance to drivers who may be unable to find coverage anywhere else, which means it targets a unique customer base and has much more flexibility on pricing compared with its mass-market peers.

That’s good news in a tough business that is going through a rough patch. The years 2022 and 2023 were some of the worst on record for the industry, with combined ratios of 111% and 112% respectively on average. It is still losing money, even though the average car insurance premium has risen from about £400 a year at the start of 2022 to £622 in the second quarter of 2024 – a rise of just under 60%, on average.

While premiums have risen 60% on average, the cost of repairing vehicles and personal injury claims has accelerated even faster. Analysts at Panmure Liberum have calculated that if insurance premiums accurately reflected claims inflation over the past four years, the average premium should be £849 per year, 36% above current levels.

Even then, the analysts warned, that would only take premiums back to 2012 levels in real terms (taking into account inflation in the price of car parts), and the industry didn’t make money in 2012.

This suggests the industry would have to hike average premiums to roughly £1,000 a year to be sustainably profitable. Considering how much flak the sector is already taking for pushing premiums up by nearly 60% over the past few years, further significant premium growth seems improbable.

It seems as if the industry has decided to start swallowing the losses – the data suggests that mass-market car insurance providers have started to reduce premiums. Sabre, on the other hand, hiked its prices by a double-digit percentage during the first nine months of 2024, according to its latest trading update, issued in mid-October. For the reasons outlined above, Sabre can push through growth while other companies fight for market share.

Should you invest in Sabre?

Sabre is focused on underwriting profitability and its profit-margin goals. As such, it will not write business that does not conform to its pricing model, whereas some of its peers may be willing to accept that risk. The firm knows its markets well, so it can price effectively without relying on guesswork or over-optimistic projections.

It’s this unique advantage that has enabled the company’s combined ratio to come in ahead of the rest of the UK motor insurance industry by 20 percentage points on average over the past decade, according to asset manager Berenberg’s analysis. In 2022, a historically bad year for the industry and a bad year for Sabre, the company still reported a combined ratio of 93.4%, significantly above its long-term average in the mid-70% range, but still profitable and better than the wider sector.

The company has substantial competitive advantages and unique qualities in a commoditised industry. However, Sabre’s current valuation does not seem to take these factors into account. The stock is currently trading at a price-to-earnings (p/e) multiple of 8.2, compared with its five-year historical average of 12.8 and peak of 18 times earnings, according to Panmure Liberum.

That could be something to do with the market capitalisation, which, at £350 million, is below the radar of most large fund managers. Investors have withdrawn tens of billions of pounds from UK small-cap funds over the past five years, depressing the valuation of small-caps and causing valuation distortions. Sabre seems to be a case in point.

It could be some time before these trends reverse, but it will pay investors to wait – the company has committed to returning the bulk of its earnings to shareholders via dividends. Berenberg believes that could translate into the company returning 43% of its current share price in dividends by 2027.

On an annualised basis, that suggests a dividend of 9.3% for 2024, 10.7% for 2025 and 11.4% for 2026, based on past underwriting profitability trends and the current solvency ratio, which sits at 85%, above the management target of 140% to 160%. Management has indicated it will return anything above this level to shareholders as surplus capital.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

The insurance industry is one of the world’s most important, but also misunderstood and underappreciated industries. Most people think of it as an unnecessary cost – they think of the products they see and use, such as home and car insurance. These are important and vital, but they are only really the tip of the iceberg of the insurance industry.

A brief history of the insurance industry

Insurance is all about spreading risk between different parties. The first use of an insurance product can be traced back several thousand years, to around 1750 BC. But it is widely believed that the modern insurance market was born in London in the mid-1600s. John Graunt, an early statistician and demographer, analysed demographics to produce a series of tables that predicted, with an astonishing degree of accuracy, how long a person was likely to live based on their situation in life. These tables enabled fledgling life insurance companies to start pricing risk accurately and helped statisticians devise other methods of measuring risk in other fields. The Great Fire of London in 1666 ushered in the fire-insurance industry. By the end of the century, the insurance industry was blossoming. 

Around the same time, coffee shops started springing up around the city, which became informal gathering places for business owners and investors to swap information and trade. Edward Lloyd, who ran a coffee shop in the city, saw an opportunity to carve out a niche in the market by building an informal gathering place for ship captains, owners and merchants. He provided information on global trade routes and sailings from London to his patrons and, gradually, Lloyd’s coffee shop became known as the place to be for the fledgling marine insurance market. Today, Lloyd’s of London remains a key hub of the global insurance market and the fifth-largest provider of reinsurance in the world.

The DNA of capitalism

Insurance has been described as “the DNA of global capitalism” and the “oil of the global economy” for the role it plays in reducing and sharing risk. Insurers basically pool risk. To generate a price for a car insurance policy, for example, an insurer will look at all the information on hand about the vehicle, the driver, where the driver lives, the chances of an accident based on the driver’s profile, location and vehicle, and potential cost and severity of any accident, and then offer a price based on the average cost of a claim and the likelihood of a severe claim. If that sounds like it involves a lot of data and many variables, that’s because it does. No company can ever be sure what the cost is going to be, which is why this isn’t an easy business. But it’s also why people need insurance. The cost of an accident could be several hundred pounds or tens of millions. An individual might be able to afford the former, but not the latter. However, for a company that’s underwriting thousands of vehicles, a large loss is manageable – it’s a cost of doing business. For a few hundred pounds a year, insurance removes this risk for one person by pooling the risk with millions of others.

This is known as primary insurance. It’s a contract between the insurance company and the buyer of insurance. Insurance firms will often then sell this risk on to a reinsurance company, which spreads the risk even further. The insurance company will often retain a proportion of the risk, say losses of up to £100 million each year, with any losses over that paid by a reinsurer. The reinsurer may then also choose to use what’s known as retrocession insurance to spread the risk even further. 

This structure is especially common for big risks – such as oil spills or natural catastrophes. These disasters could lead to tens of billions of dollars in losses, and no company wants that exposure, no matter how big it is. In these situations, firms tend to use insurance, reinsurance, retrocession and insurance-linked securities (bonds) to spread the risk far and wide. With the risk shared, no company should, in theory, need to worry about a threat to solvency if losses occur. Oil companies can then drill wells knowing there’s a fail-safe if something goes wrong and homeowners can go about their lives knowing there’s an insurance safety net if a hurricane sweeps away their home. Without insurance as a support, the propensity to take risks would be reduced and economic activity would suffer.

The hardest market of all time

Insurance is a cyclical industry. It is characterised by periods of what’s known as “soft” market conditions, where prices fall, and “hard” ones, where prices are pushed higher. The primary driver of market conditions is the availability of capital. When there’s lots of capital to be had, insurance companies compete vigorously on prices to increase or maintain market share and that usually means pushing down prices or changing the terms of contracts to make agreements more appealing to buyers. Soft markets usually come to an end with a change in the market environment, such as an increase in losses. Companies tend to respond by pushing up prices to cover losses and capital retreats from the market. A hard market then ensues until such time as capital returns to the market, attracted by high returns. The cycle then repeats itself. We’re currently in the midst of one of the hardest insurance markets of all time. Prices have been rising across the board – something most readers will have seen when they come to renew their car or home insurance. 

The Rate on Line (ROL) index compiled by Guy Carpenter, a global risk and reinsurance specialist, measures the change in dollars paid for reinsurance coverage year-on-year. It’s not applicable to the sort of insurance you or I might buy – it covers the global reinsurance and catastrophe insurance markets, the type of policies that are underwritten at Lloyd’s. The index has recorded three years of explosive growth, from 22% in 2022, to 27.5% in 2023 and 5.4% in 2024 (the index measures price growth over the previous 12 months). It looks like further price pressure will come down the pipeline in the years ahead. When Lloyd’s reported its half-year results at the beginning of September, its chief executive, John Neal, noted prices for US reinsurance had risen by 20% and 40% over the past 12 months, with similar growth in Japan. He also warned that prices in Europe had to catch up, having only risen 10% to 12%. 

Climate change and inflation are the two drivers behind higher costs. Neal warned that insurance prices in Europe would have to rise after the continent was hit by a series of natural catastrophes over the summer, from heatwaves to wildfires and storms devastating communities across the region. And it’s not just Europe. Extreme weather is changing the way insurers measure climate risks. Neal said, “The pattern of weather, which is a function of climate change, is changing. I don’t think you can simply rely on past data and say ‘That’s what happened in the past so that’s what will happen in the future’. I think there’s a lot more onus on us to understand what changing weather patterns mean.” 

The cost of rebuilding and repairing damaged property has also jumped significantly since the pandemic. Insurers have had to pass this cost on to customers, and that’s without taking into account the increasing cost of litigation as customers go to court to fight insurers for bigger payouts. Yet despite the increasing cost of disasters and claims, the insurance industry is currently going through one of its most profitable periods in recent memory. But the market has been slow to realise the opportunity here, especially for London-listed names.

Global insurance market players

The global insurance industry is massive, and there are plenty of different companies and angles investors can take to capitalise on this opportunity. While all the household names in the UK, the likes of Aviva, Admiral and Legal & General, have plenty of attractive qualities and are also benefiting from rising prices, consumer-focused insurance businesses can be challenging and often get involved in price wars. Data compiled by Hiscox and brokers at Panmure Liberum clearly illustrates the pressures. Hiscox, the only one of the four large listed London players with a big retail arm, has recorded compound price growth of around 30% in its retail business since 2018. In the core London market (essentially business written at Lloyd’s) and catastrophe reinsurance, prices have risen between 80% and 100%.

With that in mind, I’m going to focus on the global insurance market players, the names that have exposure to the Lloyd’s market and have more flexibility around pricing. There are four main players: Beazley, Conduit Re, Lancashire and Hiscox. A key measure of profitability in the industry is the combined ratio, which measures the value of claims paid out and costs against premiums charged to customers. Anything above 100% indicates the company is paying out more in losses and costs than it receives from insurance premiums and is, as a result, losing money. Anything below 100% signifies underwriting profitability as it means the company is booking more in premiums than it’s paying out in costs. Generally speaking, a combined ratio of 95% or more is quite good for an insurance company. If it is below 90%, the company is doing well and anything below 80% is considered outstanding. 

Beazley’s (LSE: BEZ) first-half results for 2024 reported an undiscounted combined ratio of 81% – four percentage points better than consensus analyst estimates. The stronger-than-expected performance led management to predict a full-year combined ratio in the low 80s. Analysts at investment bank Berenberg called these numbers “truly remarkable”. Assuming there are no major disasters in the rest of the year, Berenberg projects the company’s book value per share could compound at 20% through 2025, which would put the stock on a price-to-book-value ratio of 1.25. That’s “very attractive”. 

Book value tends to be one of the easiest ways to value insurance companies, which have large portfolios of investments to back up underwriting liabilities, often cash and cash-like instruments. Book value gives you the value of these assets as well as any insurance liabilities and potential premiums. It often gives little value to the intrinsic value of the brand and earnings growth. A book value of one to 1.5 for an insurance company is, therefore, incredibly cheap. Panmure Liberum estimates a price-to-book-value ratio of around two, which is more appropriate if the industry can earn and maintain a return on equity of 20% or more.

Beazley, like its peers Hiscox and Lancashire, provides reinsurance through the Lloyd’s market as well as through its own brokers. It also offers insurance directly to clients, insuring assets such as ships, satellites and companies against cyber-attacks. All three companies are benefiting from the global hard market. Lancashire (LSE: LRE) surpassed earnings expectations in the first half of the year by 25.7%. The company reported a combined ratio of 82.2%, while insurance revenues grew 26% year-on-year. Like Beazley, the firm predicts a mid-80s combined ratio for the full year. Lancashire stands out for its cash returns policy. Unlike its peers, which prefer to reinvest capital and grow, Lancashire has a history of returning profits to investors. Berenberg has the firm paying out 50% of earnings as special dividends in 2024, which would translate into a “very hard to beat” total cash yield of 12.3% for the full year. Book value may be one of the best ways to value insurance firms, but a low-teens dividend yield is just as good. The stock is trading at a price-to-tangible-book-value ratio of 1.3. 

Of the three big London-listed Lloyd’s insurers, Hiscox (LSE: HSX) has chalked up the worst performance this year. Despite the hard market in the global primary and reinsurance markets, Hiscox has a large retail insurance book. This has held the company back over the past year because, as noted above, competition in this market tends to be more intensive, making it harder for the likes of Hiscox to define and capitalise on its niche. During the first half of the year, the company reported a combined ratio of 77.3% on an undiscounted basis for the reinsurance and insurance-linked securities book. On the other side of the business, retail, the group’s combined ratio hit 93.8%. It has a long-term target here of 89%-94%. Still, on a group-wide basis, Hiscox reported an undiscounted combined ratio of 90.4%, and it has returned a lot of cash to investors with buybacks and dividends. That all-important return on equity number was 16.5% for the first half, down from 19.9% last year. The stock is trading at a price-to-tangible-book-value ratio of around 1.4.

A different opportunity

Conduit Re (LSE: CRE) offers something different from Lancashire, Hiscox and Beazley: it is a pure-play reinsurance provider and actually started life in 2020, almost at the beginning of the current hard market. It has picked its business carefully over the past four years, capitalising on opportunities when they emerge and avoiding everything that does not meet its strict return criteria. Profit for the first six months of the year came in at $98.1 million, 26.3% better than expectations and giving a return on equity of 19.8% on an annualised basis. Gross premiums written jumped 36.1% year-on-year, with premiums in the speciality segment up 58.6%. With a mid-80s combined ratio, the company has picked its business well and it’s the cheapest of the bunch, trading around book value. There’s also a 5% forward dividend yield on offer. 

All of the insurers look cheap compared with their current earnings potential, and while the market doesn’t seem to have acknowledged this fact, it seems other parties have started to take note. Earlier in the year, shares in Hiscox jumped after rumours started to swirl that Japan’s Sompo Holdings and Italy’s Assicurazioni Generali had been running a rule over the business. If the market continues to overlook the value here, it seems only a matter of time before others start to swoop.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Home insurance providers have been slammed for providing poor customer service while hiking premiums.

Consumer watchdog Which? found more than four in 10 people were facing delays and obstacles during the claims process. At the same time, the average cost of premiums has surged by almost a third over the past year, according to Go.Compare data. Which? has urged the Financial Conduct Authority (FCA) to take action to improve standards.

Previous data from the Association of British Insurers (ABI) also found average prices for home insurance premiums had rocketed. MoneyWeek has provided tips on how to cut the cost of your property’s cover.

The criticism of the home insurance market has come as providers are being taken to task on motor insurance. Insurers have been criticised for being unclear about ‘stripped back’ cover options. Which? has also called on the FCA to examine cases of lower-than-expected payouts.

Which?: home insurance market failings ‘concerning’

According to Which?, there has been a drop in consumer satisfaction when it comes to home insurance. As a result, the website said it has not awarded any providers with a Which? Recommended Provider (WRP) gong - the first time it hasn’t done so since it began the endorsement scheme in 2010.

A survey of 1,678 claimants it conducted across June and July 2024 found average satisfaction scores ranged from a low of 59% (TSB) to a high of 70% (Axa). Although 70% is usually enough to secure a WRP award, the website said limitations in Axa’s standard coverage prevented it from achieving the status.

LV, More Than and Policy Expert were among the firms singled out for criticism. Which? said its poll found these providers had exposed the highest proportion of their customers to steep hikes. Increases to premiums were seen by 85% of LV claimants, 76% of More Than customers and 78% of those covered by Policy Expert.

Across the board, it saw a “concerning” gulf between prices and satisfaction levels. More than two-thirds (64%) of respondents had seen higher premiums at renewal, with 11% being subjected to a ‘significant’ hike. At the same time, the website said many of those who had been polled had cited poor value for money as being a significant factor behind their dissatisfaction. Overall, eight out of 20 insurers received two out of five stars due to the settlement values they offered.

Insurers have previously put the price hikes down to the escalating cost of claims. ABI figures released in August showed that the industry paid out a record £1.4 billion on property claims between April and June, up from £782 million in the same quarter of 2023. The insurer trade body said “adverse weather”, including heatwaves and droughts, had had a “devastating impact” on people and their homes, prompting the record figures.

While the cost of claims and the value of settlements was one thing, Which? said its survey had also uncovered issues with the claim process. Almost half (44%) of those who took part in the poll said they had had to chase up their insurer to progress their claim. As a result, 34% expressed regret for making a claim in the first place. Previous research by the consumer watchdog found another 48% of people had encountered at least one issue during the claims process.

Responding to the survey, an ABI spokesperson said: “Insurers appreciate how stressful having to make a claim can be, and they want to help their customers by processing them as quickly and efficiently as possible. However, certain challenges beyond their control can impact on timings, such as delays around repairs, access to skilled tradesmen and in some cases short supply of alternative accommodation.

"Our members understand the importance of clear and timely communication to support customers throughout any claim and we’re working with them to understand where any improvements can be made.”

FCA urged to launch home insurance market probe

Which? has called on the financial regulator to launch a crackdown on poor service and rising costs in the home insurance sector. It has also launched a petition on its website to put further pressure on the FCA. At the time of writing, it had been signed by almost 73,000 people.

Rocio Concha, Which?’s director of policy and advocacy, said: “Our research exposes a troubling disconnect between what customers are paying for home insurance and the service they receive.

“It’s clear that many insurers are falling short in supporting customers when they need them most, resulting in declining satisfaction and record complaints. These practices are unacceptable, especially as premiums continue to soar. It’s time for the FCA to hold insurers accountable and ensure that firms treat their customers properly if they make a claim and provide fair value.”

The FCA is already reviewing the claims-handling processes of insurance providers. It has previously criticised the sector for not yet meeting Consumer Duty requirements.

Direct Line has returned to profit but failed to match analyst expectations after losing almost half a million motor insurance customers. 

The insurer posted a pre-tax profit of £61.6m for the six months to June 30, compared to losses of more than £75m a year ago. However, this was below the £85m forecast by most analysts. As a result shares fell 2% during early trading on Wednesday. 

While investors have enjoyed dividends in the past, they may not drive away with as much following the news.

Direct Line, which announced in July that it would appear on price comparison websites for the first time, said it had lost 488,000 motor customers after increasing the cost of cover by as much as 30%.

The insurer additionally said it remained on track to cut annual costs by at least £100m by the end of 2025. Direct Line is one of the UK’s largest motor insurers.

Adam Winslow, who took over as chief executive of the London-listed home and motor insurer in March, said: “The actions we have taken are beginning to make a difference but there is more to do. “

A volley of profit warnings led to the departure of Direct Line’s former boss Penny James last year and meant the company had to ditch its dividend.

Is now a good time to invest in Direct Line?

The fact the company did not meet expectations on profits will disappoint but the numbers were a radical improvement on the same period a year ago when it posted losses of £76.3m.

Since that time the new CEO has begun a cost-cutting drive and said it would list on price comparison websites for the first time in a bid to breathe life into a flagging share price.

The insurer, which also owns Churchill and Green Flag, had previously prided itself for not being on the likes of Moneysupermarket but, after a review of the business, changed tack. 

Winslow said at the time: “In the past five years, price comparison websites have continued to increase their share of new business from around 80 per cent to 90 per cent… To grow, winning on price comparison websites is critical. Our presence on these platforms, alongside our powerful direct sales offering, will enable us to reach even more customers.”

“Russ Mould, investment director at AJ Bell, also said at the time: “This a major change for the business and a significant event. General insurance is a highly competitive market and unless a provider is willing to accept skinny margins by being the cheapest, they run the risk of being further down the rankings of a comparison site than some people would look when scrolling for deals.”

The changes have been well-received but investors might be wise to wait and see how the business review plays out and who else the new CEO decides to bring into the firm to strengthen the transformation. 

Winslow said: “We will continue to drive business transformation during the second half of 2024 and into 2025, as our new high calibre management team continues to arrive.”

If you’re planning a fun-filled holiday, you might want to check if your travel insurance policy covers everything you want to do.

While booking flights, choosing the right travel cards, and sorting out your travel money might be at the forefront of your mind when planning a trip, it’s important to ensure you’ve got travel insurance before you travel.

Not only is travel insurance worth getting, you should also read the fine print carefully, or it might come back to bite you. You hardly want to foot the bill for something that could have been avoided in the first place.

We explain what activities aren’t always covered.

Which activities are not covered by travel insurance?

Activities that you might think of as low risk, such as horse riding or snorkelling, are not always covered as standard in some single-trip policies.

Research by Go.Compare looked at 932 travel insurance policies to see which ones cover leisure activities. Of the 932, 10% of single-trip policies didn’t cover horse rides – that figure drops to 2% for snorkelling.

Moreover, only 5% of single-trip policies included quad biking as standard, while just 21% automatically covered white water rafting.

Rhys Jones, travel insurance expert at Go.Compare, said: “While it’s no big surprise that high-risk activities like white water rafting or quad biking aren’t covered by most policies as standard, travellers might be shocked to find that horse riding, sea kayaking and snorkelling aren’t always included. That’s why it’s also crucial to check your policy documents if you plan to do some water sports or other adventurous activities on holiday. What may seem low risk to you, might not be seen that way by your insurer.”

If you’re planning a sports-focused break, such as windsurfing, paddleboarding, alpine hiking, or a long-distance cycling tour, you should carefully read the small print of your travel insurance policy.

“Look out for things like altitude limits, competitive sports exclusions or clauses in your insurance cover about using appropriate safety gear,” Jones said.

“You might even consider taking out specialist travel insurance to cover you for this kind of trip.”

We look at how various activities are – or aren’t – covered under single-trip travel insurance policies.

Source: Go.Compare

How to find out what your travel insurance covers you for

Your insurance policy documents will list exactly what is covered, and the instructions you need to follow to be eligible to make a claim.

This could mean that you’re only covered in a group activity with a qualified instructor or guide, or with recommended safety equipment.

According to Go.Compare, most providers tend to cover less injury-prone activities, such as cycling, swimming or trekking, but the golden rule is to not assume a particular activity is covered without checking it first.

For swimming, a standard policy may cover you to dive up to a depth of around 18 metres. If you’re planning to go any deeper, you may need an extreme sports policy add-on that will cover you for up to 30 metres.

Similarly, with mountain climbing, policies have restrictions on the altitude you can trek to before needing specialist cover. For activities like bungee jumping or skydiving, your insurer may only cover you for two or three jumps per trip.

Factors that could result in your claim getting rejected include:

• not wearing the appropriate gear required for your chosen sport
• behaving recklessly
• not following the rules set out by an instructor
• being under the influence of alcohol or drugs.

Some policies also have age restrictions. We explain how to get travel insurance for over 70s in a separate guide.

How to choose your travel insurance 

Comparison sites are a good way to find insurance that suits your specific needs, allowing you to plug in your requirements and search from a pool of providers.

But remember not to simply pick the cheapest cover, as it tends to include several exclusions like age, medical history, and how long you’ll be covered for.

Some packaged bank accounts also provide travel insurance as one of the benefits, so it’s worth checking if you’re already covered before shelling out for a new travel insurance policy.

Make sure you’re covered for the locations you plan to visit. Some policies have European or Worldwide cover, but it doesn’t always mean each and every country you plan to visit is included. For instance, some policies don’t include Turkey in European cover but count Morocco, Tunisia, or Egypt.

It might also be worth getting annual cover if you’re a frequent traveller, as it tends to be cheaper than a single-trip policy.

Ultimately, you want to have peace of mind when you’re on holiday, so having valid travel insurance should give you one less thing to worry about when travelling.

A surge in the price of car insurance has led to a sharp rise in insurers offering ‘stripped back’ cover to try and stay at the top of price comparison tables. But this risks causing major confusion for drivers, a consumer group says. 

As car insurance premiums have surged by almost 70% in the past year, insurers are rapidly introducing new 'essentials' cover tiers to offer more affordable alternatives, according to analysis by Fairer Finance. 

As a result, the consumer group is urging insurers to ensure full transparency so consumers understand exactly what these stripped-back policies do and do not cover.

James Daley, managing director at Fairer Finance, says: “Many insurance brands that once had a single comprehensive car insurance policy, now can have three or four different sub-brands all offering different tiers of cover. This brand stacking is designed to ensure they can keep their name at the top of the price comparison charts – but it makes choosing the right policy all the more difficult for consumers.”

These policies typically provide more cover than basic third-party, fire, and theft policies, but omit many features found in standard car insurance policies. Common exclusions in essential policies include windscreen cover, stolen key replacement, courtesy cars, and the uninsured driver promise, a guarantee to reinstate no-claims discounts and reimburse excess if involved in an accident with an uninsured driver.

 Which insurers are stripping back?

Admiral, Ageas, and Hastings have offered these stripped policies for some time, but 2023 saw newcomers including Churchill, Sainsbury’s, and Geoffrey Insurance adding an essentials policy to their product list, as well as new insurers like Boom and Moja introducing them as an option.

The cost of car coverage has rocketed as a result of inflation significantly increasing the cost of replacement parts for vehicles and labour rates.

Daley adds: “There’s no standard definition of an essentials policy, with some insurers stripping out windscreen cover, while others have raised excesses, or removed cover for lost or stolen keys.

“Since many customers will opt for essentials cover due to the lower price, it is vital for insurers and comparison sites to be clear about the exclusions and limitations of these policies. People need to understand these restrictions at the time of purchase rather than at the time of making a claim. Customer trust will only further erode if the industry doesn’t address this.”

Previous research from Fairer Finance conducted earlier this year found that consumer trust in car insurance experienced a notable decline in the last six months, coinciding with a significant increase in premiums. 

Daley says: “This situation raises the question of whether there should be a minimum standard for comprehensive policies to prevent insurers from continually stripping features back to bring down the price. “

Choosing the right travel insurance policy is vital while going on holiday.

Amid the excitement of booking flights, hotels and restaurants, travel insurance can be easy to overlook – until you’re faced with the prospect of unexpected medical costs, cancelled flights, or lost luggage.

We look at how to pick the best travel insurance for your trip.

8 tips to find the best travel insurance

1. Check if you’re already covered

Before buying a new policy, check whether you already have travel insurance through a packaged bank account or another financial product. Some current accounts include worldwide travel insurance as a benefit, and although the account may have a monthly fee, you could potentially save on the cost of buying separate cover.

For example, Nationwide Building Society’s FlexPlus account, which costs £18 a month, includes worldwide family travel insurance with some winter sports coverage.

2. Don’t leave it to the last minute

Once you’ve booked your trip, getting travel insurance should be at the top of your list. It means that as soon as you’ve made any non-refundable bookings, you’ll be protected if illness or cancellations of any unforeseen events prevent you from travelling.

According to Go.Compare, one in four holidaymakers wait until the day of departure to buy travel insurance, leaving themselves exposed if something goes wrong beforehand.

Rhys Jones from Go.Compare says: “The best time to book travel insurance is as soon as you’ve made any financial commitments toward your trip, such as booking flights, accommodation, or tours. That way, you’ll have more comprehensive options and peace of mind knowing you’re protected long before your journey begins.”

3. Cheap isn’t always best

Comparison sites are a useful starting point when you’re searching for a travel insurance policy, allowing you to compare quotes from a host of providers in minutes. But the cheapest policy won’t necessarily be the best value. You should pay close attention to policy exclusions and excesses, particularly if you’re travelling with expensive belongings or have pre-existing medical conditions.

4. Are you covered for your destination?

Make sure your travel insurance covers the locations you’re planning to visit. Most policies have ‘European’ or ‘Worldwide’ cover, but this doesn’t always mean every country is included.

Some policies won’t cover you for travel to major destinations like the US, Canada, the Caribbean and Mexico, or exclude Turkey from European cover. On the other hand, some non-European countries, like Morocco, Tunisia and Egypt, might be included in European cover. It’s always best to make sure.

5. Is travel insurance worth it for UK holidays?

If you’ve booked a UK holiday, things work a bit differently. You won’t need cover for NHS treatment, but it could still be useful to have insurance, depending on the nature of your trip. A policy may cover lost baggage, last-minute cancellations, or if you become unwell and can’t go.

However, most insurers only cover UK breaks involving at least two consecutive nights in pre-booked accommodation, and camping trips often don’t count, so be sure to check the small print.

6. Consider annual cover

If you travel several times a year, an annual multi-trip policy could be more economical than buying separate insurance for each holiday. However, be aware that annual insurance policies cap the number of days you can be on holiday per trip, so check that limit if you’re planning an extended stay abroad.

7. Declare any medical conditions

It might be tempting to omit certain details about your medical condition to keep costs down, but if you do end up needing to make a claim and your undeclared condition is revealed, your claim is very likely to be rejected. This would leave you responsible for significant medical expenses overseas, as well as the cost of repatriation if necessary.

8. Do you need specialist cover?

Standard policies don’t usually include every activity. If you’re planning a ski holiday, golf break or heading on a cruise, you may need to pay a premium for specialist protection. We have a separate guide on activities your travel insurance might not cover.

What about the GHIC?

Since Brexit, the Global Health Insurance Card (GHIC) has replaced the old European Health Insurance Card. The card is free to apply for and gives you access to state healthcare in most European countries, either for free or at a reduced cost.

While it’s a good idea to have a GHIC, it is not a replacement for travel insurance ‒ you should have both. Find out more about the GHIC and how to apply on the NHS website.

How to make a claim on your travel insurance

You hopefully won’t need to make a claim on your travel insurance policy, but it’s worth understanding the process before you travel to make things less stressful.

If things go astray, here are a few things to remember:

1. If you make a claim while travelling: Keep your policy number and emergency contact details in hand. Save all receipts and paperwork so the claim is easily dealt with.

2. If you make a claim after getting home: Check the insurer’s claims deadline, your policy limits and any excess before submitting your paperwork. Once you’ve got all the information, contact your insurer and ask them to send you a claim form.

If your belongings are stolen, Sean Doolan at travel insurance broker Swinton Travel Insurance recommends: “In the case of theft or loss, report it to the local police within 24 hours and obtain a crime reference number.

“You’ll need to gather the necessary documentation to support your claim, including receipts or proof of purchase for lost or stolen items, medical reports and hospital bills for illness or injury, police or incident reports for theft or accidents, travel documents like boarding passes or delay notifications, and photographs of any damaged belongings.”

3. If you make a medical claim: Contact your insurer before receiving medical treatment wherever possible. In an emergency, call their helpline as soon as you can. You may have to pay any medical expenses upfront, up to a certain amount, so keep all receipts for reimbursement.

The Financial Conduct Authority (FCA) has been urged to crack down on car insurance firms that offer lower-than-expected payouts to their customers.

Which? has called on the financial regulator to act after its research found widespread dissatisfaction with insurers’ valuations of written-off or stolen vehicles. 

A third of the UK’s biggest providers were rated poorly for their settlement values, according to a survey undertaken by the consumer watchdog.

It comes only days after the FCA said it was concerned about some of the valuations being made by motor insurers. 

In a review published on 27 March, the City watchdog found evidence of practices it described as “unfair”, including insurers undervaluing written-off or stolen vehicles and then only increasing their offer once a customer complained.

Car insurance premiums have soared over the last two years, with recent data showing costs had soared 46% year-on-year. Even drivers with large no claims records have been hit by the price hikes.

Which?: Car insurance ‘lowballing’ leads to low satisfaction ratings

Which? has said the FCA needs to toughen up its stance on the car insurance market in the wake of its poll of 2,793 policyholders who have made a claim in the past two years.

Conducted in November 2023, the survey found eight out of 24 major insurers received two out of five stars for their valuations when a claim was made. The eight firms were:

• AA
• Admiral
• Bank of Scotland
• First Central
• Halifax
• Quotemehappy.com
• Sainsbury’s Bank
• Swinton Insurance

Which? said NFU Mutual did not have a large enough sample size to receive a customer rating, and was therefore not included in its research.

One example of lowballing that the consumer watchdog said it had seen involved a couple who had been involved in a car accident in February when another vehicle had driven into their second-hand Kia Sportage, writing it off.

Despite having bought the car for £12,395 in November 2023 - a figure that the couple had then included in their policy when they took it out - their insurer, Hastings Direct, initially offered them £8,400. They refused this initial offer, and another one of £8,610.

Hastings then asked its own expert to value the car, and came up with a third and final offer of £9,285. This figure was £3,100 below what the couple paid, and £885 above the insurer’s first offer.

In response, Hastings Direct told Which?: “We aim to settle claims quickly and fairly and in line with the current market value of a vehicle that is written off. In this case, we made an initial offer based on the vehicle information available.

“However, following receipt of further information about the vehicle, including an engineer’s report and photos, we offered an updated offer of £9,300 to the couple and they accepted this amount. We have apologised for the payment delay and are pleased the couple are happy with this outcome.”

Hastings Direct was not one of the eight car insurance firms singled out by the consumer watchdog in its November survey.

FCA urged by Which? to ‘toughen up’

After its review found evidence of some “unfair” practices in the car insurance market, the FCA said it was in the process of “engaging” with the firms it had looked at.

It said it wanted to “ensure they make improvements” and “address” the findings of the regulator’s report. It is understood that the regulator has previously taken action against firms which it has found were undervaluing car insurance claims. But MoneyWeek has not seen any evidence of what this enforcement entailed and which insurers were hit by it.

But Which? said more action was needed, and that the FCA ought to name names as the insurers it had analysed in its review had been made anonymous. The consumer watchdog’s director of policy and advocacy, Rocio Concha, said: “Claiming for a car accident is already a stressful ordeal, but our research suggests it’s becoming even more so due to insurers offering low payouts.

“It’s concerning to see that a third of firms analysed are rated poorly by customers for their payout values, despite repeated warnings from the regulator not to undervalue cars when settling claims.

“There is ample data available to firms and regulators on car values by age, and firms are obliged under the Consumer Duty to demonstrate fair value. The FCA must now insist that firms take action to assure customers they will get a fair price for their vehicle should they need to claim, without undue hassle or needing to complain to get a better offer.”

The FCA did not directly respond to Which?’s call for further action. Instead, it pointed to a comment given by its executive director of consumers and competition, Sheldon Mills, when it published its review. He said: “Having your vehicle written off or stolen can be intensely stressful and we expect firms to offer the right support to help their customers. We expect all motor insurers to take note of our findings and we are engaging directly with those that have issues that need to be addressed.”

How to complain about your insurer

Insurance customers can complain to their provider if they are unhappy with how a claim has been treated.

The insurer must consider your complaint within eight weeks

If you are still unhappy, consumers can complain to the Financial Ombudsman Service (FOS) if they believe a complaint they have made to their car insurance provider isn’t handled to their satisfaction. 

Last week, the FOS revealed it expects to receive almost 50,000 complaints about car insurance over the next 12 months.

The cost of car insurance has skyrocketed in the past year, peaking at an average of £861 a year in the third quarter of 2024.

Prices have since started to drop, with Confused.com finding that the average cost of a policy was £757 a year in the second quarter of 2025.

While drivers are paying less than they were this time last year, the cost of insurance is still well above pre-pandemic levels.

There are some tips that you can follow to cut your car insurance premiums. You can consider a black box, pay upfront, or make sure you do not inadvertently invalidate your insurance.

You can also time the date that you renew your car insurance policy to make sure you are buying it on the cheapest day.

And simple, legit, ways of tweaking can also cut costs - see our article on how your job title can impact your car insurance and how to carefully word what you do for a living.

While these tips can help you pay less, one of the most powerful ways to drive down the cost of your car insurance is by making the most of your no claims bonus.

We look at everything you need to know about a no claims bonus, and describe how it can help you save on insurance costs.

What is a no claims bonus?

A no claims bonus is a type of discount that reduces the cost of your insurance when you renew it. You can get it by building up a history of not making any insurance claims.

The value of a no claims bonus typically increases with the number of consecutive years that you have not made a claim.

For example, while one or two years of no claims can put a dent into your car insurance premiums, a much more substantial discount can be achieved if you have gone the maximum 15 years without making a single claim.

There is no law that says insurers have to offer a no claims bonus, but most of them do. It is worth checking to make sure this is the case when you’re shopping around for your car insurance.

How does a no claims bonus work?

While insurers often have slightly different rules for how their no claims bonus works, they mostly follow the general idea that you get an increasingly large discount for each year that you do not make an insurance claim.

The value of your no claims bonus will differ from insurer to insurer, and different firms will offer different discounts for each year you have gone without making a claim.

Alicia Hempsted, insurance expert at MoneySuperMarket, said that “every year that you don't claim on your insurance your insurer will apply a discount to your policy, calculated as a percentage off your premium.”

“This discount saves you money on your current policy and can reduce the cost of a new policy,” she added.

Data showing the average value of a no claims bonus when purchasing a new policy can be found below.

Source: MoneySuperMarket, based on car insurance policies sold through MoneySuperMarket between 01/01/2025 and 16/07/2025

For the most part, you can also usually bring your no claims bonus with you when you switch car insurance providers, but you will need to provide proof of your no claims bonus.

Typically valid examples of this are renewal letters from insurers, cancellation notices, or a written letter by your insurer that proves you haven’t made any claims.

Hempsted said that “when purchasing a new insurance policy, your new provider will honour your no claims bonus up to a certain number of years and apply that discount to your new premium.” It is therefore a good idea to keep track of your bonus and make sure your insurer applies it.

Does a no claims bonus expire?

Generally, a no claims bonus can only expire for one of two main reasons.

Your bonus can expire if you have to make an insurance claim as you will no longer have made ‘no claims’, and therefore will stop being eligible for the bonus.

While this may sound a bit harsh on the surface, some insurers do not invalidate your no claims bonus for all claims.

For example, insurers may not cancel your no claims bonus if you were involved in an accident caused by another car recklessly driving.

Hempsted tells MoneyWeek that “your no claims discount might remain unaffected in certain situations when making a claim, like proving you weren't at fault in an accident or making a minor claim.”

Such minor claims that you can often make without affecting your no claims bonus are for things such as lost keys, getting your windscreen repaired or replaced, or making a claim under breakdown cover.

The other major way that your no claims bonus can expire is by terminating your insurance.

Naturally, if you are not driving then it does not make sense for the insurance company to let you keep a no claims bonus as you will not be making any claims.

While many insurers will allow you to keep your bonus if you simply stop being insured for a few months, most will scrap your bonus altogether if you stop being insured for a longer period of time.

Again, it is best to contact your insurance provider and find out what their terms and conditions are.

Should you protect your no claims bonus?

Whether or not you should protect your no claims bonus depends strongly on your own personal circumstances.

However, a broad consideration to bear in mind is that making a claim will often set your no claims bonus back quite a few years, possibly even taking you back to scratch – to check how much you could be set back, consult your insurer.

If you have only built up one year of no claims then this won’t hurt you too much, but it can be incredibly painful if you have built 10 years or more of no claims.

Data shown above shows that such a long no claims period could drive down your premiums by almost £1,000. So, if you have a small incident where you were at fault, it could sometimes be more cost-effective to pay out of pocket for a repair.

It is worth remembering, however, that each circumstance is different and you will need to think carefully about the options available to you.

Hempsted added that “when choosing between making a claim and protecting your no claims bonus, it’s worth keeping in mind your chosen excess, the cost of what you are choosing to pay for rather than claiming, and how your premium would change if your no claims bonus is reset.”

Some insurers allow you to take out certain policies that protect your no claims bonus even if you have a small prang that is your fault.

Some insurers offer protected no claims discount policies which allow customers to make a certain number of claims over a specified period of time without affecting their no claims discount.

This usually lets you make two claims over a three to five-year timeframe without losing your no claims record, according to the Association of British Insurers (ABI).

What claims you can make without affecting your bonus will depend on the terms of your insurance so it is always best to double check your documents before you make a claim, or contact your insurer.

You could see an increase to your premium if you take out no claims protection as part of your policy. The additional cost could save you money in the long run, however, as having less than a year of no claims means your premiums will soar.

It’s also worth noting that if you have an accident and decide to sort it out without claiming via your insurance, you still need to follow protocol. “Regardless of whether you’re claiming, you still need to inform your insurer if there is an incident. Failing to do so could invalidate your insurance and result in rejected claims later on,” Hempsted said.

While (slowly) falling mortgage costs and steadying inflation figures have been a welcome relief for homeowners and consumers alike, the Bank of England’s interest rate cut in August was a new blow for savers, with many lenders dropping rates below 5%. And reductions in savings and inflation rates certainly haven’t fed through to insurance bills. 

Ever-increasing home and car insurance premiums continue to eat a hole in people's personal finances. According to data from the Association of British Insurers (ABI), the average price of home insurance premiums has risen by nearly a fifth (19%) on a year-on-year basis and Consumer Intelligence revealed that home insurance quotes have spiked by nearly 42%, marking the highest annual increase on record.

Extreme weather and the impact of Storms Babet, Ciaran and Debi triggered more payouts this year, with insurers forking out a record £1.4 billion on claim payouts between April and June 2024, per ABI figures. The latest report marks the fifth consecutive quarter where weather-related claims have crossed the £100 million mark, with claims from storms, heavy rain and frozen pipes reaching £144 million.

While insurers have had their fair share of struggles, homeowners have had to bear the brunt of the financial impact. Data from the Financial Conduct Authority (FCA) suggests that 23% of the claims were rejected by providers in 2022, and some firms even refused to payout on nearly half the cases.

 Sam Richardson, deputy editor of Which? Money, said, “Good quality home insurance is increasingly important – yet customers with these products face some of the lowest claims acceptance rates. While some home insurers' prices are going up, research has found that some are prolonging customers' ordeals by failing to deal with claims in an appropriate manner.”

Where are home insurance premiums rising?

Consumer Intelligence’s data from April 2024 found that homeowners in London have seen the largest increases, with quoted premiums having almost doubled (49.9%) since last year. In comparison, the North West was the least expensive area. All regions have seen quoted prices increase over the past 12 months, ranging from the North West at 37.6% to the South East at 45.8%.

In the ten years since Consumer Intelligence first started collecting data (February 2014) quoted premiums have risen overall by 68.8%.

Factors such as the age of policyholders and of the property are also a big factor in the rises. 

• Over-50s households (42.4%) continue to see slightly higher quotes for their home insurance, compared to the under-50s (41%). 
• Properties built between 1910 and 1925 attracted the highest average quoted premiums (46.4%), while the lowest quoted costs were for homes built between 1940 and 1955.

“Homeowners with prior claims may see additional increases in coming months following recent storm damage, although insurers could spread the claim costs across all policyholders driving further market inflation,” said Laura Vas, senior insight analyst at Consumer Intelligence.

Ways to cut the costs of home insurance

You can't predict weather events or what your insurer will charge but there are some steps you can take to cut the cost of your home insurance.

1. Combine your insurance policies to cut costs
Most insurers will give you a discount if you go for a home insurance policy that covers both the building and contents.

2. Improve your home security
You may want to consider spending a little money now to save you money on your premiums in the years ahead. For example, upgrading your home security could save you money in the long run.

“A safer lock can drastically lower the cost of your policy, as it demonstrates you are proactively reducing the risk of a break-in and needing to make a claim,” Chris Lear from insurance broker One Sure Insurance told The Telegraph. Lock manufacturer Yale believes upgrading your home security could shave up to 10% off your premiums.

You could also join – or set up – a local Neighbourhood Watch scheme. These reduce local crime and insurers love them, typically reducing premiums by 5% for scheme members.

3. Check your policy and think about skipping the extras
Consider what you are paying for. There are several extras that you may not need, that will increase the cost of your policy. 

4. Increase your excess
Another way to cut your premiums is to increase your excess. If you are happy to pay more if you do make a claim, your premiums will fall substantially. For example, putting your excess up to £400 from nothing could reduce your premiums by around 25%.

5. Don't forget your no-claims bonus
Finally, don’t forget your no-claims bonus. Insurers love customers who pay them premiums but don’t make a claim. So, they will give you a no-claims bonus. Even a one-year no-claims bonus could cut your insurance by 10%, rising to as much as 50% if you have five years or more without claims, says Go Compare.

6. Check if you can get favourable rates via a current account or credit card
Some packaged bank accounts or rewards credit cards may offer home insurance at a discounted rate or as a perk with the account so it's worth checking the small print.

7. Pay for your insurance annually rather than monthly Another good option is to pay for your insurance annually rather than monthly. Many people choose to pay monthly as it seems easier to pay in small chunks than one lump sum. But you will pay more in the long run. That’s because insurance firms charge more for monthly premiums. On average a home insurance policy costs 17% more if you pay monthly, according to Go Compare. If you can’t afford the full amount, then put it on an interest-free credit card and pay that off in 12 monthly payments instead.

Nathan Blackler, home insurance expert at Go Compare, said, “Despite external factors such as this [bad weather], there is also a wide range of factors that will affect the cost of your home insurance premiums, from the size of your property to the area where you live. All of which can impact how much you are likely to pay for your insurance, which is why it’s always so important to shop around when your policy is up for renewal, so you’re getting the best product and price for your circumstances.”

Your home is likely to be the most expensive thing you’ll ever buy, and that’s before you consider the contents. Over a lifetime, we can accumulate a vast amount of items, such as furniture, works of art and jewellery, some of which will be priceless and have sentimental value. 

However, some items will have a value, which can change over time, so protecting these assets makes a lot of sense. Mark Smith, director at valuation specialists Quastel Associates, says: “About 80-90% of clients we see are incorrectly insured. The biggest problem is that people forget about boring stuff like kitchen equipment, books, curtains and carpets and clothes. It all adds up.”

Underinsurance is when the amount you’re covered for by your insurance is less than the cost of replacing or repairing your belongings. It can result in claims of damage or loss being only partially met or not at all by insurance.

These are the reasons why it pays to buy home and contents insurance from a trusted provider, a provider that will help to ensure you protect your precious assets with the right level of cover.

Covering your home

A house is more than just an asset or bricks and mortar. It’s a home, your home in fact, filled with a lifetime of accumulated possessions. Some may be precious and treasured - gifted or inherited - others may be stored away and overlooked. Some may have been acquired for their value, as an investment or gift, such as fine art, antiques, jewellery or other collectables. It’s important to insure these items, but what’s their true value? The value of such items rarely moves in line with inflation, and prices can fluctuate considerably over time.

We understand this and as part of our NFU Mutual Bespoke Home Insurance, we work with trusted partners who can, for a fee, provide a valuation for your belongings. NFU Mutual Bespoke Home Insurance is specially designed to cover high-value homes with contents over £150,000. Our approach is tailored around you and your lifestyle to give you the peace of mind that your most valuable possessions are in safe hands.

With our local knowledge, backed by an extensive team of experienced underwriters and claims handlers, we offer a personal service throughout, from quote to claim. And it’s our commitment to a local, personalised service that means we can ensure you get the cover you need - right down to the finest detail.

But don’t take our word for it. NFU Mutual Bespoke Home Insurance provides one of the highest quality offerings in the market and is rated 5 Star for High Net Worth Home Insurance by the leading financial information, ratings and fintech business, Defaqto.

We have over 110 years of experience protecting what’s important to our customers, and our customers are clearly impressed, with 9 out of 10 Bespoke policies renewed every year.

Beware of underinsurance

As part of our commitment to helping customers, we are acutely aware of the risk underinsurance poses to your valuables. That’s why we are committed to helping you understand if the value has changed annually - something that is important to understand in a period of high inflation. If you have expensive items – perhaps jewellery, fine art or collections – then it’s particularly important to be mindful that standard insurance may not fully protect you or include access to specialist repair or replacement services. 

But it’s not just expensive items you should be aware of, the value of everyday items, such as clothes, furniture and electronics (even kitchen utensils), can add up. That’s why we work with expert valuation partners who can provide specialist reviews of your belongings. This will help ensure you’re never left without appropriate cover and the devastating financial losses of underinsurance - without mentioning the emotional pain of losing something you can’t afford to replace.

To find out more about NFU Mutual’s Bespoke Home Insurance and/or to get a quote, visit the website for further information: nfumutual.co.uk/bespoke

The National Farmers Union Mutual Insurance Society Limited (No. 111982 ). Registered in England. Registered Office: Tiddington Road, Stratfordupon- Avon, Warwickshire CV37 7BJ. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. A member of the Association of British Insurers

The most valuable asset that most people own is their home. The average cost of a house in July 2024 was £271,619 according to Nationwide, and house prices are continuing to rise.

With so much of your wealth likely tied to your property, finding the right home insurance is vital so that you can protect it.

Average home insurance premiums have plummeted in the last 12 months, with the average quote being 7.9% lower in June 2025 than it was 12 months ago and 3.9% lower than three months ago, according to Consumer Intelligence.

The most commonly quoted premium is now between £150 and £199, while 62.5% of consumers are able to source quotes for less than £200 as increased competition in the market is providing consumers with better value.

The falling average cost is thanks to a reduction in price of combined policies as well as a significant price fall in the contents-only market, according to Laura Vas, senior insight analyst at Consumer Intelligence.

However, despite the cost of home insurance being lower today than last year, premiums have increased by 54.2% since 2014, rising far faster than inflation.

The good news is there are still some further steps you can take to trim your home insurance premiums without compromising on your cover. We explain what they are.

We look at how to ensure you’ve got valid home insurance in a separate piece.

How to cut home insurance costs

1. Combine your home insurance policies

Instead of buying separate buildings and contents cover, a simple option is to combine your policies, as most insurers are likely to give you a discount for buying two policies from them.

Contents insurance covers your home possessions in the case of any loss, theft, damage or destruction. It usually includes anything that’s not a property fixture (i.e. that you could take with you when moving home), such as furniture, appliances, clothing, electronics, furnishings and personal items. You’ll pay more for accidental damage cover and for cover away from the home.

On the other hand, building insurance covers the damage repair cost of your home in the case of a fire, flood, storm or vandalism. Most buildings insurance covers the cost of damage to walls, roofs, floors or any other fixtures.

2. Pay for your insurance annually rather than monthly

Another good option is to pay for your insurance annually rather than monthly – a home insurance policy costs 22% more, on average, if you pay monthly, according to Go.Compare in April 2025.

While paying in smaller chunks may feel easier to manage, you will often end up worse off as insurance firms tend to charge more if you opt for monthly payments.

This is because monthly payments are treated as a credit agreement and they charge for providing that credit service. You’ll have to sign a separate credit agreement and the total amount will be more (sometimes a lot more) than if you pay in one lump sum.

A more cost-effective way to pay, if you don’t want to pay the full amount, is to put it on an interest-free credit card and pay that off in monthly payments instead.

Source: Go.Compare. Based on median cost of premiums of home insurance for policies sold through Go.Compare between 1 November 2024 and 30 April 2025

3. Improve your home security

You may also want to consider spending a little money upfront to save money on your premiums in the years ahead. For example, upgrading your home security to help protect the property from burglars could save you money in the long run.

“Your insurer will ask you about any security measures you have in your home when calculating the cost of your premium,” explains Nathan Blackler, spokesperson for Go.Compare home insurance, “so it’s worth comparing the cost of upgrading your home security measures versus the cost of your home insurance quote without them.”

He adds: “Higher levels of security make your home less attractive to burglars so it's worth checking that all access points to your home are secure – thief-resistant locks that meet British Standard 3621 are preferred by insurers and could help reduce your premium.

“Measures such as installing an approved burglar alarm, CCTV systems and security lighting are also good steps to take and could further influence the cost of your insurance.

“Tell insurers about these measures when getting a quote for a policy and it could affect your policy price, as well as give you peace of mind that your home is properly protected.”

4. Join a local Neighbourhood Watch scheme

You could also join – or set up – a local Neighbourhood Watch scheme.

These schemes are intended to reduce local crime, making it less likely that you will have to make an insurance claim.

When insurers recognise this and see that you’re part of the watch, it can typically reduce your premiums by 5%.

5. Check your policy and think about skipping the extras

Consider what you are paying for. There are several extras you can add to your policy that will increase the cost, but you may not really need them.

• Emergency home protection (relating to heating, plumbing and drainage crises) usually adds around £50 a year to your insurance bill, according to Go.Compare.
• Accidental damage cover bumps premiums up by an average of 10%.

6. Don't forget your no-claims bonus

Don’t forget your no-claims bonus. Insurers love customers who pay them premiums but don’t make a claim. So, they will give you a no-claims bonus.

Even a one-year no-claims bonus could cut your insurance by 10%, rising to as much as 50% if you have five years or more without claims, says Go.Compare.

7. Increase your excess

Another way to cut your premiums is to increase your excess. If you are happy to pay more if you make a claim, your premiums will fall substantially. For example, putting your excess up to £400 from zero could reduce your premiums by around 25%.

8. Check admin charges

Insurers often impose administration charges to your policy which you may not notice initially.

You could be charged when you cancel your policy, if you make any changes to your personal details (like switching banks), or if you pay monthly and miss a payment.

How much should home insurance cost in the UK?

The cost of a home insurance policy will all depend on the size of your home. The overall average quote for a combined home insurance policy is between £150 and £199, according to the latest data from Consumer Intelligence.

Yet this nationwide average does not reflect the many different factors that can affect the cost of your cover.

For example, data from Go.Compare in the first quarter of 2025 shows the average one-bedroom home costs £175 to insure, much cheaper than the £433 that it costs to insure the average 5+ bedroom property.

Meanwhile, you can expect to pay more or less for your home insurance depending on where in the country you live. The most expensive place to insurance your home is Northern Ireland, according to Go.Compare, where it costs an average of £424.

In contrast, the cheapest place for home insurance in the UK is the North East where premiums cost an average of £184.

The premium that you will end up paying will likely not line up perfectly with the averages and may be more or less depending on the size of your home, its location, age, and type.

Do house insurance premiums increase after a claim?

Once a claim is made on an insurance policy, you will be seen as a slightly higher risk by insurance companies. The higher the perceived risk, the higher the cost of insurance.

So if you make a claim, it’s very likely that your premiums will increase when you come to renew your policy..

It’s important that you declare any claims made to any new insurers. They can and will check anyway – your claims history is stored on the Claims and Underwriting Exchange (CUE) database for six years.

So before making a claim, first weigh up if it’s going to be worth it in the long run.

The cost of car insurance has been extremely high over the past few years, peaking at an annual average of £885 in the fourth quarter of 2023.

Luckily, average premiums have been dropping relatively quickly since then with comparison platform Quotezone finding the average cost of car insurance fell to £664 in June.

While this still marks a steep decline of £221 (-25%) in just under two years, the cost of car insurance is still well above pre-pandemic lows.

Most people know that variables like your age, location, mileage, and losing your no claims bonus, can add to the overall cost of your car insurance.

However, many do not realise that something as simple as your job title can impact your premium – and it might not be in your favour.

We look at which job titles could be costing you more, and ways to cut the cost of car insurance without falling foul of your insurer.

Which job titles cause the biggest spike in car insurance costs?

Healthcare assistants, warehouse workers, and the unemployed are facing the steepest car premiums, according to recent data from Quotezone.

The comparison site found that these job titles were among the most commonly flagged as “high risk” by insurers, pumping up their premiums by nearly double the national average.

The job title that Quotezone found paid the most for car insurance was ‘healthcare assistant’, with those who hold this title being charged an average of £1,064 to insure their cars.

Meanwhile, warehouse workers will also be charged far more than the average driver, with premiums costing them around £1,063.

Other job titles seeing above-average costs include accountants (£1,041), delivery drivers (£1,013), company directors (£1,004), and chefs (£952).

The reason for these outsized car insurance premiums may be because many of these roles involve long hours, high stress, or shift work – all of which are factors that insurers can associate with higher risk.

The job title that commands the highest premiums is not actually an occupation, rather it is the lack of one. According to Quotezone’s data, being unemployed will mean you pay an average of £1,265 to insure your car.

Greg Wilson, CEO of Quotezone, said this was “worrying”, noting that the high average cost could be because the UK’s unemployed tend to be younger people “who are normally the most expensive to insure, given their additional risks and lack of experience”.

“One thing drivers can do is explore how they word their job title when reviewing quotes. As long as the description remains accurate and honest, variations in an individual’s job title could help bring the cost down,” says Wilson.

A full list of the job titles that drive your car insurance costs above the national average can be found below.

Source: Quotezone, July 2025

Which job titles pay the lowest car insurance costs?

While working as a labourer might lead to your car insurance almost doubling, certain other professions are luckier.

Professionals that pay the least in car insurance are civil servants, paying £494 – 25% less than the national average, Quotezone said.

Teachers also pay less, with the average educator paying £531 for their insurance, 20% less than the average price.

Administration assistants also pay less than most for their insurance, although not by much. Their average car insurance premiums cost £663.49, just 51p less than the national average.

Quotezone explains that these professions are often viewed as low-risk drivers because of the nature of their work. They are associated with more structured roles and regular working hours, which could mean fewer accidents and claims.

Perhaps surprisingly, a job title that commands significantly less in car insurance is an HGV driver, who pays an average of £556 for insurance, 16% less than the national average.

This may be because these drivers often undergo high levels of training and certification to operate HGV, so have significant driving experience, Quotezone explains, while also spending more hours in company vehicles rather than personal cars.

A list of the four job titles that lead to lower car insurance premiums can be found below.

Source: Quotezone, July 2025

Can you tweak your job title to reduce insurance premiums?

While you shouldn’t lie about your job, if you find another description for what matches your role best, it may be worth comparing quotes for both occupations and seeing which is cheaper.

For example, if you’re a journalist, you can pay significantly less in premiums if you tweak your job title to ‘editorial staff’, while if you opted for the title of newsreader you could pay almost double, according to an online tool from MoneySavingExpert.

Similarly, if you are a roofer, you could potentially reduce your car insurance premiums by tweaking your job title to ‘labourer’ for savings, albeit small ones.

It’s important to be very careful when doing this. The job title on your policy must be accurate for your role or it can invalidate your car insurance coverage. As a result, if you try to make a claim, you may find you are left having to pay the cost of repairs entirely out of your pocket.

There’s a further financial impact too, since you will need to declare that you have had an insurance policy voided when arranging other financial products in the future. This can mean they are more expensive or even lead to financial firms declining your application altogether.

So, before you go ahead and tweak your job title, be sure to apply common sense and ensure that it still fairly reflects what you do, just in different words.

We look at the cheapest day to buy car insurance in a separate article.

How your marital status affects your car insurance

Another way that your car insurance costs could be being inflated is through your marital status, according to MoneySuperMarket.

While it may not be why you get married, lower car insurance premiums could be a happy side effect of getting hitched – though it’s probably best not to tell your spouse that’s the reason you tied the knot.

The average single person pays £859.04 for their car insurance, making it the most expensive marital status to have when trying to get cover for your vehicle.

Getting married can drive this down by over £100, with the average married driver paying £721.35 for their insurance.

Telling your insurer that you are in a civil partnership leads to average car insurance premiums of £799.25, but stating you are in a partnership means average premiums of £760.77.

Meanwhile, the average car insurance premium for a person in a common law marriage is significantly lower at £606.82.

As for those who have been less lucky in love, they tend to pay less for their car insurance than when they were married. The average premiums for divorcees are £509.57, while they are £496.24 for people who are separated.

Alicia Hempsted, car insurance expert at MoneySuperMarket told MoneyWeek: “Insurers consider lots of factors when pricing a premium, such as age, length of no claims discount, marital status, occupation, location, driving experience, and the make and model of the car.”

She added that all of these factors are used to assess your risk and they then price your premium accordingly.

Source: MoneySuperMarket, August 2025

The government is being urged to cut a tax that is adding almost £100 to car and home insurance policies.

Higher inflation has already put up the cost of cover for drivers and homeowners but there is another charge that the government could help reduce – insurance premium tax (IPT).

The Association of British Insurers (ABI) claims IPT is typically adding almost £100 to the annual cost paid by consumers for motor and combined buildings and contents home insurance policies.

The trade body is urging chancellor Jeremy Hunt to reduce the rate in next week’s Autumn Statement to help millions of households and businesses manage their rising insurance costs.

What is IPT?

IPT is a tax levied on insurers.

It applies to most general insurance policies including motor, home, pet, and private medical insurance. The standard rate has doubled to 12% since October 2015.

Last year, the tax made £7.45billion for the government, the ABI said.

While insurers pay the tax, in practice it is passed on to customers as it feeds into the amounts charged for policies.

For motor and home insurance alone, IPT typically equates to an added cost approaching £98 per year, the ABI said, made up of £60 for motor insurance and just over £37 for a combined home buildings and contents policy.

IPT also adds around £46.50 to a pet insurance policy and £13.50 to an annual travel insurance policy, typically.

How IPT affects your finances

The ABI said IPT is likely to hit the poorest the hardest who spend proportionately more on insurance, such as home and motor cover.

The costs of some insurance policies have already been surging amid jumps in costs for raw materials, labour and energy. Rising second-hand car prices and the increasing sophistication of cars have also been factors pushing up insurance prices.

The ABI calculated that a single person with a car  - paying motor insurance - who is renting a flat  - paying contents cover - and paying travel insurance could be paying around £87 in IPT.

For a couple with two cars and insurance policies for each, building and contents cover for their own home, pet insurance and two travel policies, the IPT bill could be around £231 annually.

If one person in the couple also has private medical cover, not supplied through work, they could be paying around £500 annually in IPT, the ABI said.

“Insurers are doing all they can to offer competitively priced insurance, despite facing some substantial increases in costs outside of their control,” says Mervyn Skeet, the ABI’s director of general insurance policy.

“Now has never been a better time for the government to show its support to the millions of homeowners and businesses who do the right thing by protecting their families and livelihoods against sudden financial shocks, than to reduce insurance premium tax.”

Travellers in the United Arab Emirates (UAE) and other Gulf states have been affected by flight cancellations after war broke out between Iran and the US and Israel, leaving many stranded in the region.

Following Iranian missile strikes on the UAE, commercial flights to and from cities like Dubai have been cancelled, leaving many Brits stuck in the country.

Dubai airport, one of the world’s busiest, is currently closed, though some flights have resumed from Abu Dhabi airport, also in the UAE.

The UAE is not the only country which has closed its airspace following the Iran-US conflict. Many other countries in the Gulf have also grounded flights.

Meanwhile, the Foreign Office now advises against all but essential travel to the UAE, Israel, Bahrain, Kuwait, Palestine, and Qatar. They also ask that you tell the UK government if you are in those countries.

With flight disruption happening at such a large scale, we look at what you need to know when claiming compensation for travel delays.

What should you do if your flight is cancelled due to war?

If you are stuck in the UAE or other countries, the UK Civil Aviation Authority (CAA) has issued the following guidance that travellers should follow.

It says the first thing you should do is contact your airline to check what their guidance is, and what support is available to you.

The CAA says when flights are delayed and cancelled, they expect airlines to minimise the overall impact on you by “keeping you informed and looking after you”.

Travellers have certain legal consumer rights when flying with any airline that departs from a UK airport or that is a UK or EU air carrier.

If your flight is covered by these passenger rights, the CAA says your airline is required by law to get you home and look after you while you wait by providing meals, refreshments and hotel accommodation proportionate to the length of time you are delayed.

However, during periods of major disruption, such as this one, it may be challenging for the airline to find you an alternative route back to the UK. In this case, the CAA expects your airline to do all it can to offer you an alternative flight and keep you updated.

The CAA adds that if your airline is unable to proactively offer you care, or offer suitable replacement flights, it expects it to promptly reimburse you for the reasonable costs you incur making your own arrangements.

To make sure you are able to claim these reimbursements, the CAA advises that you keep receipts and avoid incurring excessive costs.

Can you get compensation if your flight is cancelled due to war?

In regards to the current situation in the Middle East and Gulf, the CAA says that “passengers are unlikely to be entitled to fixed sum compensation under UK passenger rights legislation for any delayed or cancelled experiences”.

This is because the current situation is likely to be viewed by the CAA as “extraordinary circumstances”, a classification that means passengers are unlikely to be entitled to compensation.

While compensation may be unlikely, “extraordinary circumstances” still mean you are entitled to replacement flights, where possible, and care.

The CAA also notes that their interpretation of “extraordinary circumstances” is illustrative and for guidance only, and that in the future a passenger or group of passengers can still try to claim compensation if they disagree, including by going through the courts.

How to claim compensation for travel delays and cancellations under normal circumstances

If your flight has been delayed, disrupted, or cancelled for reasons unrelated to the conflict in the Middle East and Gulf, you may be able to claim compensation in some circumstances.

As outlined above, when your travel is disrupted, airlines have the responsibility to take care of you and get you on another flight to your destination as soon as possible.

They are required to cover certain costs, including expenses for food, drink, and even phone calls to inform loved ones of your journey changes.

If an overnight stay becomes necessary, they may also need to provide accommodation ahead of your rescheduled flight.

Remember, your first move should be to contact your airline and ask what their guidance is.

Under European air passengers’ rights rules, airlines must ensure passengers reach their destination as soon as possible. If you’re stranded abroad, you’re entitled to hotel stays and meals until you can be flown home.

• For flights less than 1,500km, the delay needs to be a minimum of two hours.
• For flights between 1,500km and 3,500km, the delay must be a minimum of three hours.
• For flights longer than 3,500km, the delay must be at least four hours.

The airline should provide you with vouchers for this directly, though you can also keep receipts for the money spent and try claim it back from the airline later on.

Be aware that the airline will only pay up for reasonable expenses, so you won’t get the money back if you opt for luxury options.

If the flight is more than three hours late, and it’s the airline’s fault (so it's not an exceptional circumstance), then you should be entitled to compensation. The level of compensation you may receive will vary based on the length of the delay and the distance of your flight:

• For flights less than 1,500km and a delay of at least three hours, you can claim £220 in compensation.
• For flights between 1,500km and 3,500km and a delay of at least three hours, you can claim £350 in compensation.
• For flights of more than 3,500km and delays of under four hours, you can claim £260. This jumps to £520 for delays over the four-hour mark.

If the flight is delayed by more than five hours, you do not have to take it and can instead claim a full refund.

Should the flight be cancelled, the airline is required to provide either a full refund or cover the cost of a replacement flight. If the replacement flight delays you by more than two hours, and you receive less than two weeks’ notice, then you are entitled to compensation, though the sums can vary significantly.

In each case, the compensation figure is per person.

If the airline is not helpful with your claim, or you feel you have not been treated fairly, then you may be able to take your complaint to an alternative dispute resolution scheme – if the airline is a member of one. Otherwise, you can take it to the CAA.

What compensation can you get for issues beyond the airline’s control?

Airlines do not have to pay out financial compensation for “exceptional reasons”.

War is covered under “exceptional reasons”, but so are airport power cuts or air traffic control errors.

Consumer rights expert Martyn James says while you may not be eligible for monetary compensation under exceptional circumstances, airlines do have certain responsibilities to take care of you.

He said: “Even though you don’t get monetary compensation for delays or cancellation like you would do if the airline was at fault, they must still try to get you to your destination. This can involve putting you on one of their own flights or failing that, on that of a competitor.”

Think carefully about requesting a full refund if you still want to go away. “Flights are more expensive if you buy on the day or within 48 hours, so you may find your refund doesn’t come through immediately or the cash doesn’t go very far.” It may make more sense to request that the airline gets you on the next available plane.

The CAA said that if flights are available on the day of travel passengers must be booked on them, even if this is on a rival airline.

“If you can’t get hold of the airline, then check the options online, take screenshots and if you can’t contact the airline, make notes of what you did to try, then buy direct,” says James. “If you use a credit card you may also have other protections further down the line with your card provider if the airline refuses to pay out.”

You might also be entitled to food and drink vouchers, the cost of calls to communicate with others about the situation, accommodation and transport to and from the airport.

Owning a pet is an expensive business and it is getting more pricey to protect our furry friends.

Research shows that pet insurance premiums have increased by a fifth amid rising vet fees.

The costs and responsibilities of pet ownership are sadly putting many people off.

There has been an increase in the number of puppies who came into RSPCA care last year, with the charity warning that people may still be impulse buying young dogs they aren’t ready for, years after the first post-pandemic puppy boom.

In 2023, 569 dogs under the age of one arrived in the care of the animal charity, compared with 355 in 2022 and 378 in 2021 - marking a 50% increase in two years.

It comes as there is more focus on the cost of owning a pet.

The Competition and Markets Authority (CMA) launched a formal investigation into the vets market in early March 2024, warning of a lack of transparency when it comes to pricing and little competition, which it says is impacting customers.

The investigation is due to finish next year but an update in July suggested there may be issues around limited treatment information and local competition for consumers as well as a lack of clarity on who owns a vet practice.

Standard pet visits or consultations can cost around £50 on average, according to ManyPets but the cost of treating injuries such as a fractured bone or road accident can easily run into the thousands of pounds.

For example, treatment for arthritis in a dog can cost more than £2,000, according to the Association of British Insurers (ABI), while it can cost £1,000 to treat diabetes in a cat.

Many pet owners will take out insurance to cover these costs.

But pet insurance premiums have now risen by 21% annually as of February 2024, according to data firm Pearson Ham. 

Year-on-year analysis reveals a 13% increase in insurance prices for cats and a 23% rise in insurance premiums for dogs.

Alternatively, rather than paying a premium for something that you may not need, it could be best to “self-insure” by putting aside money.

Even this option isn't straightforward though.

The pros and cons of pet insurance

The principle of pet insurance, as with most insurance, is that you pay regular premiums and your pet’s medical expenses will be covered if they become ill or injured. 

That can give you peace of mind that your pet will be looked after just as you would want to protect other family members.

But the fundamental problem is that policies are often riddled with limitations and exclusions.

Most put a limit on how much they will pay out per illness or injury, so even if you’ve paid a small fortune in premiums, you could still find yourself footing the bill for veterinary treatment after a certain time period or cost limit.

You also have to pay an excess every time you claim.

This has steadily increased over the years, so you can expect to pay the first £100 or £125 of every claim. 

On top of the excess, once your pet is deemed to be old – a mere eight years old for dogs and cats with many insurance firms – you also have to pay a proportion of each claim. This can mean you are paying as much as 20% of the claim plus the excess.

Finally, once you’ve made a claim for an ongoing condition you can’t switch insurer as existing conditions are nearly always excluded from new policies. That can leave you trapped with your current provider, paying steadily rising premiums.

All these limitations make the fact that premiums have risen by double the rate of inflation even more irksome. 

The average annual pet insurance premium is £327, according to the ABI, but this only rises as your pet ages.

The cost of self-insurance

You can avoid those huge premiums if you self-insure.

This could involve putting money away in an easy-access savings account.

This may well be the best option on average, but don’t underestimate how much you could have to pay if you are unlucky enough to have a seriously sick or injured pet. 

The average claim is now around £800 so if you saved the average monthly premium of £27.25, you would only have around £327 to cover this after a year.

Some injuries can be far more expensive so make sure that you are in a position where you can pay a large bill in an emergency.

For example, claims for spinal surgery often cost £8,000 to £10,000, according to the ABI.

If you take out insurance, look for the best deal, taking account of all limitations, not just price. 

Compare the pay-out limits to get as much cover as possible and get a lifetime policy. 

These will pay out up to a set amount each year. That amount resets after 12 months, so you should never hit a point where you are paying all the vet’s bills despite having insurance.

No one likes dealing with insurance companies. But imagine one that will pay your claim in seconds rather than weeks or months. This is the promise of Lemonade, the flag carrier of the new insurance technology (insurtech) companies that are trying to disrupt the sleepy and conservative insurance industry. In 2017 Lemonade claimed a new world record for settling a claim in just three seconds.

A New Yorker called Brandon had his $1,000 Canada Goose coat stolen on a freezing January night. So he opened the Lemonade app on his iPhone to report a claim and recorded a minute-long video report stating where he had bought the coat and what had happened. Three seconds after hitting submit, the claim had been agreed by the firm’s anti-fraud algorithm and the cash was in Brandon’s bank account.

He couldn’t believe it – and neither could the worried chief executives of traditional insurance companies in New York and London when the word started to spread. On 2 July 2020, Lemonade had its initial public offering (IPO). The company was backed by highprofile tech investors including SoftBank and Baillie Gifford. By the end of the day the share price had reached over $69, up 139% from the IPO price of $29, prompting market commentators to state that the bankers had woefully underestimated the shake-up that Lemonade and its car-insurance peers Metromile and Root were going to give the old-fashioned insurance market.

Lemonade was the new Amazon taking on the tired Barnes & Nobles of the insurance world. By August 2021 the market cap of Lemonade had reached $10bn. Metromile, a pay-as-you-go car insurer for occasional drivers, and Root, which bases its prices on driving data collected from the policyholders, both floated on the US stockmarket shortly afterwards.

Growth is slowing, losses are not

Much has changed in the 20 months since then. The three great disruptors have failed to make the breakthrough that the analyst cheerleaders predicted and all three are now trading at around 80%-90% down from their peak prices. In part this is because “jam tomorrow” tech stocks such as Lemonade are no longer in vogue as investors prefer companies that are profitable today.

But, more importantly, it seems that selling insurance is not as straightforward as selling books, or even providing a banking service to smallbusiness clients. So what has gone wrong and what do the current numbers look like? All three are continuing to grow revenues, but the growth is slowing and they remain an insignificant part of the $1.3trn US insurance market.

Unfortunately, losses are growing at a much faster rate. When an insurer has been underpricing its business it is very difficult to correct this while maintaining growth. Increasing prices drives business away and the young customers of these insurtechs are particularly price sensitive. It is also an industry with limited economies of scale.

The biggest cost is paying claims and this grows proportionately with customer numbers. Lemonade has had to raise additional funds, diluting shareholders and causing the share price to tank.

The concept behind these companies’ business models was to use technology to price insurance risks accurately, understand claims trends and to make it easier to target pricing more effectively to maximise sales.

They look to employ more coders and data scientists than underwriters, claims and call-centre staff. To use the Canada Goose example, if your technology can confirm certain elements of the claim –such as whether the shop where the coat was bought is a registered stockist and whether the price looks right – then you don’t need to employ expensive claims adjusters to handle the claim.

Three fundamental errors

Unfortunately, Lemonade and the others made some fundamental errors in their business models. While it may seem obvious to target tech-savvy millennials, in practice they make poor customers for insurers since they have very little to insure. They are the asset-light generation who rent their accommodation, use Uber and Zipcar instead of owning a vehicle and even rent their music collection from Spotify. Lemonade also decided to have a “zero everything” offer with no rate rises guaranteed and no excess applied on claims. This only encouraged clients to use their policy as a cash machine, claiming for every little scratch. The timing of the launch and expansion of these challengers also coincided with the absolute bottom of the insurance-pricing cycle following several years of pricing declines. To take market share from incumbents meant cutting already depressed pricing still further. Insurance is also a highly regulated industry, especially in the US where pricing needs to be filed and agreed with the state insurance commission.

Finally, selling insurance is not like selling books. Insurance is an intangible product, a promise to pay in the future if something bad happens. For this reason, reputation and brand recognition is more important than for most other industries. Will a start-up with a silly name really be there for you when you need it – when your house has flooded, or when you are taken ill on holiday?

The knowledge that your policy is with a long-established firm helps you sleep at night. If Lemonade and the others had had some more people with experience of the insurance industry in their management teams and on their boards then some of these pitfalls might have been avoided.

Lessons for the industry

The future looks tough for these new insurers. They have had to raise significant additional funds to offset the losses and this has depressed their share prices. In November 2021, Lemonade announced a merger with Metromile, which should complete this year.

This will help it bulk up and diversify its business. However, in many ways this lack of success is a shame, as there is much to learn from these businesses for mainstream insurers. Their marketing and branding are exceptionally slick and the apps and websites very intuitive and easy to navigate. The focus on data analytics, process automation and streamlining of the underwriting process is important.

Traditional insurers are finally now responding to the challenge and increasingly working with tech companies from small start-ups to giants such as Alphabet to help them build sophisticated pricing models to automate much of the underwriting process. These can be linked to big data companies such as Experian and automatically bring in risk data connected with a company name or an address. This can include construction details, flood exposure and local crime statistics, which can all help to evaluate the risk and calculate the required premium. By combining the latest technology with a deep understanding and experience of underwriting these risks, many traditional insurers are now better equipped to take on and beat the new challengers.

Better times for traditional insurers When I last looked at the insurance sector in MoneyWeek at the start of last year I was forecasting better times ahead for traditional insurers. The pricing cycle had turned decisively in their favour and pricing levels have continued to rise at a strong clip (see chart below), with compound rises of around 60% over five years. In contrast to the insurtechs, many of my recommendations have had impressive results. For example, commercial insurance giant AIG (NYSE: AIG) reported a pre-tax profit of $12bn for 2021 versus a $7.3bn loss in Covid-19-affected 2020. The share price has risen some 50% since my tip.

In the UK, the London insurance market remains the pre-eminent global market for commercial insurance of all kinds. It is centred around the Lloyd’s of London marketplace, where some 80 syndicates compete for business. Lloyd’s recently reported a major turnaround in fortunes for the market when it announced an overall profit for 2021 of £2.3bn following a loss-making year in 2020.

Some Lloyd’s syndicates are backed by major global insurers, others by pension funds or private capital and a few are listed on the stock exchange. Of the listed firms Beazley (LSE: BEZ) has also had a significate change in its fortunes with a 2021 profit of £370m following a $50m loss the year before. Its Lloyd’s peer Hiscox (LSE: HSX) had its best result in five years.

Only Lancashire (LSE: LRE) disappointed due to a heavy exposure to catastrophe events last year and investors’ concerns about possible war losses from the Ukraine conflict. My preferred Lloyd’s of London play remains Helios Underwriting (LSE: HUW), which I own.

This company has stakes in several of the best syndicates in the market, has a very diverse portfolio and a long record of outperforming the wider market. It has grown significantly over the past year as it raised funds from institutions such as Polar Capital, which are specialists in the sector. It has used the capital to acquire syndicate capacity from private Lloyd’s investors.

I anticipate insurance sector results to be even stronger in the coming year as the benefit of the higher premiums flows through to the bottom line. If traditional insurers can learn the right lessons from the insurtechs then the outcome could be better still.

Say goodbye to the insurance policy “loyalty penalty”. From next month insurers will be banned from penalising long-time customers. Consumers have long complained that renewal quotes for car and home insurance rise every year unless customers switch: insurers profit from consumer inertia.

Figures from comparison site Compare the Market show that “over half of households saw their insurance premiums rise at renewal in the past 12 months by an average of £81”, reports Grace Gausden for ThisisMoney. Customers who switch save an average of £262 on car insurance and £113 on home insurance, compared to those who auto-renew. The estimated 46% of vehicle and home policy holders who stick with their insurer are paying a steep price for their loyalty.

The Financial Conduct Authority (FCA), the City regulator, wants to put a stop to that. From January 2022 insurers will have to offer the same rates to new and existing customers who buy via the same channel (the same comparison site, for instance). The FCA forecasts that the changes will save consumers £4.2bn over the next decade. The likely upshot is that non-switchers will win and the more organised will lose; the changes are expected to see premiums converge, with those who auto-renew paying less overall, while new customers are charged more. “Avoid auto-renewing” your home and car insurance has long been basic personal-finance advice, but in the future the savings made by switching are likely to be less impressive. Instead of being a no-brainer, switching will depend on whether a competitor can offer a better deal for the long term, rather than just dangling a cheap introductory rate.

The new rules mark a “fundamental shift in the car and home-insurance market”, but no one is quite sure how things will shake out, says Ian Smith in the Financial Times. Some say the habit of shopping around on comparison sites has become ingrained, but the FCA thinks there will be less switching as there will be less incentive to do so. Others hope that insurers shift to competing more on service and their reputation for paying claims than on price.

Bag a deal before the new year

With premiums for new customers set to rise, it’s time to see if you can bag yourself a deal before the new year, says Martin Lewis of Money Saving Expert. Check even if your current policy is not nearing renewal. While switching early incurs an administration fee (typically about £50), the potential savings may be even greater. One customer reports saving “over £400” after switching his home and car-insurance policies from a company he had been with for over 30 years. To begin your search, check at least two comparison sites, as well as insurers such as Direct Line and Aviva that do not appear in these listings. If you do want to stick with your insurer, then haggle: “Take the best price you’ve got to your existing insurer and see if it’ll match it.”

Put a reminder in the calendar to renew early. Compare the Market says that car insurance policies cost an average of £707 for someone switching on the renewal date, versus £401 for someone switching 20 days earlier, says Vicky Shaw in The Independent. “Around a third… of quote comparison enquiries are made the day before a policy ends or on the end date.”

Shopping around for a better deal on insurance is not many people’s idea of a fun Christmas activity; but thanks to the loyalty penalty ban it might be the last time you have to do it for a couple of years.

The final stage of unlocking is just around the corner. But more socialising and freer travel will also bring more road accidents and burglaries. Lockdowns have been a boon for the insurance industry. Motor insurers enjoyed a windfall last year as empty roads saw claims plummet.

They have even been passing some of those savings onto drivers: Compare the Market reports that the average car-insurance premium fell to £629 between April and June this year. That is the lowest quarterly level since 2015 and £126 cheaper than before the first lockdown.

Yet the era of falling premiums “is about to come to a screeching halt”, says Emma Dunkley in The Mail on Sunday. Claudio Gienal, the boss of insurer AXA UK, says traffic levels are already back to pre-pandemic levels. “He predicts the number of cars on the road is going to accelerate rapidly” after 19 July.

Meanwhile, Churchill Home Insurance says that there were 100,000 fewer reported UK burglaries in 2020, a 27% fall, as people were trapped at home. Nonetheless, the average cost of home cover rose by 5% last year to £177.29, reports Compare the Market. The industry says that “although we may no longer be being robbed… we are breaking or setting fire to more things”, says David Byers in The Sunday Times. It’s a dubious excuse.

As James Daley of Fairer Finance points out, “accidental damage is not included as standard in most home-insurance policies”. Using the rise in self-inflicted combustion to justify baseline premium hikes looks unreasonable.

Burglaries will bounce

These are hard times for criminals. Ed Magnus on This is Money reports that the average burglar is thought to have lost £12,954 last year as robbing and thieving became less lucrative. A “burglary bounce” is expected as we spend more time out of doors, so it’s time to “turn your home into a fortress”.

Install reliable door locks – “cylinder locks”, commonly found on UPVC doors, can be snapped in seconds. Basic Yale locks are also not much of a challenge for a thief. New property owners should change all the locks: you have no idea how many keys are in circulation for the current ones. Think about putting a few lights on a timer if you are going away, and don’t post your holiday snaps on social media until you get back home.

New technology offers extra ways to keep your house safe, says Colin Baker in The Sunday Times. A keyless door lock is not too expensive and will convince opportunists that “you’ve got the place wired like Nasa”. Video doorbells are even better. When someone rings, a smartphone app alerts you and begins to record: “You can talk to the caller as though you’re just busy out the back or upstairs, no matter where you are in the world”.

There are downsides to being too tech-heavy, though, says James Max in the Financial Times, who was burgled last year. Remembering “all the codes and keeping track of the keys and fobs” can be a “kerfuffle”.

Electric security gates are said to add 5% to a property’s value, yet “they have been nothing but trouble. The remotes use batteries that are impossible to find in most high-street shops… And you will need a PhD in computer science if you want to ‘pair’ them with your car”. A slug found its way into the circuit board, frazzling both itself and the gates.

Vaccine passports. Coronavirus tests before departure and return. Sudden reclassification of a country’s risk status while you are abroad. The threat of an expensive stay in a government-run quarantine hotel on return. International travel in the pandemic era will make any traveller nostalgic for the time when all they had to worry about were long queues, rip-off charges and lost luggage.

So if you’re planning a holiday, make sure you check how these risks will affect your travel insurance. Insurers have updated their terms since the first lockdowns in spring 2020 and most now offer some form of “coronavirus cover”, but the exact details vary widely.

On the plus side, virtually every policy covers emergency medical costs and repatriation if you fall ill while abroad, says Harriet Sime in the Daily Mail. The usual advice when choosing travel insurance policies is to get “£2m of medical cover for Europe, or £5m beyond”.

What’s more, the majority of policies will cover circumstances such as your trip being cancelled because you have contracted the virus prior to travel. However, if you get a call from NHS Test and Trace telling you to isolate, you may be out of luck: only 18 out of 60 policies looked at by Times Money Mentor cover emergency repatriation in this case, says David Byers.

The traveller bears the brunt

Beyond that, the risks of travelling during the pandemic are increasingly being borne by the consumer. First, note that the majority of policies are currently only valid for a handful of destinations, says Ben Smithson on The Points Guy. The government advises against “all but essential travel” to amber and red list countries, giving insurers legal cover to void guarantees. Some specialist firms (who typically cover workers in war zones and after natural disasters) offer coverage for amber list destinations, but this is not the norm.

In the past, you could usually claim if the government changed its travel advice before or during your trip. This is now exceedingly rare. If your green holiday destination turns amber you will be out of luck. Meanwhile, no policies that the Daily Mail examined would cover the cost of unexpectedly having to quarantine in a hotel on return. Travellers returning from countries that suddenly go on the red list will have to pay £1,750 per person out of their own pockets.

Other ways to reduce risks

With travel insurance offering a partial solution at best, look for other ways to reduce the risks, says Miles Brignall in The Guardian. Package holidays have greater protection under the Air Travel Organisers’ Licensing (Atol) scheme. A change in travel rules would force the tour operator to cancel. Customers are then technically entitled to a refund within 14 days.

Try to book flexibly, says Jaymelouise Hudspith in The Daily Post. More airlines are now offering free date changes, while hotels and rental accommodation providers are increasingly allowing cancellation at short notice, sometimes as little as 24 hours.

Indeed, “wait until the very last minute if you can” before booking, says Lucy Perrin in Times Expert Traveller. “There are going to be some amazing deals … and the longer you leave it, the more of an idea you’ll have on the places you can actually travel.”

Car insurers continue “to punish loyal customers with price hikes despite a massive drop in the number of road accidents” in lockdown, says Will Kirkman in The Daily Telegraph. Four in ten customers who stuck with the same provider saw their annual bills rise by an average of £49 a year in the last three months of 2020, says comparison site Confused.

The so-called “loyalty penalty” is expected to be banned from July but until then insurers can raise your premiums when you renew. So, what can you do to cut your bills? Shop around when it is time to renew. “We know from our research that insurers are still putting up renewal prices for some drivers,” Louise O’Shea from Confused told The Telegraph. “Even if the increase is small, please don’t settle for this as there will be an insurer out there willing to offer a better price.”

When you are looking for a new car-insurance policy make sure you think carefully about the details you give for your driving habits. We have all driven a lot less over the last 12 months, and it is unlikely your mileage will hit the same level in 2021 as in 2019. So think about cutting your estimated annual mileage. Just don’t get carried away: underestimate it and you could face problems if you make a claim.

Car insurance charged by the mile

If you aren’t driving far, consider switching to a policy that charges you per mile. RAC is offering this type of policy to those who estimate their annual mileage at under 6,000 miles a year. You pay an activation fee of £50, then a mileage premium of at least 4p a mile, plus a premium for when your car is parked, starting at £14 a month. This policy won’t track how you drive, only how far. You stick a tag in your windscreen and pair it with an app on your phone.

“Someone who paid a £50 set-up fee, plus a £16 a month parked premium and was charged 8p a mile for their RAC Pay by Mile insurance policy would end up with a bill of £522 for the year if they covered 3,500 miles,” says David Byers in The Times. That is below the average premium of £603, says Compare the Market.

But assess your mileage as accurately as you can before you sign up: someone covering 6,000 miles a year on the same payments as above would rack up an annual premium of £722 – well above the average. RAC is only the second insurer to offer pay-as-you-drive coverage; By Miles is the other. You may also be able to ask your insurer for a partial refund if you haven’t gone as far as you estimated when you signed up. Direct Line offers Mileage MoneyBack of 2% of your premium for every 1,000 miles you didn’t drive. Aviva and Sheilas’ Wheels also offer refunds. You have nothing to lose by asking your insurer if they will give you some of your money back.

When it is time to renew your insurance policies you may be in for a shock. The pandemic has prompted a rise in premiums for several types of insurance. Here’s how to hunt down the best deals.

“A DIY boom during lockdown has been partly blamed for the price of home insurance increasing by 7% this year, from an average premium of £239.10 to £255.79,” says Jessica Beard in The Daily Telegraph. Aviva noted “a rise in claims for DIY disasters” during the summer.

If your home insurance is due for renewal, shop around using price-comparison sites. And only get the cover you need. For instance, make sure your buildings insurance covers the rebuild value of your home – you can use the calculator on the website of the Association of British Insurers to work this out (you will need to register first) – and not the purchase price, which is usually far more.

Contents insurance

As for contents insurance, most people undervalue this, so take the time to be sure you are fully covered for the value of your belongings. You don’t want to find out when it comes to the crunch that the insurance you’ve been paying for won’t cover the full value of your possessions. Improve your home security too. “Insurance is all about risk, so if you can prove you’re a less risky proposition to insurers, you’re likely to unlock cheaper premiums,” says Stephen Maunder of consumers’ group Which. This means making sure you have insurer-approved locks on your doors and windows and deciding whether a burglar alarm would save enough money to justify the installation cost.

If Covid-19 means you are now working from home you should tell your insurer when you renew your home insurance. “While insurers assure me that working from home during the pandemic is not a problem, running your own business from home is,” says Dean Dunham in the Daily Mirror. If you are doing the latter you may need to take out a business insurance policy. Speak to your insurer to find out what you need.

Travel insurance

Travel insurance, unsurprisingly, has soared since lockdown. Premiums for European cover rose by an average of 9% between March and August, says comparethemarket.com. Insuring a trip to America will now cost you 16% more.

To add insult to injury, “many policies do not cover travellers for coronavirus-related cancellations”, says Beard. If you are planning a trip, whether in the UK or abroad, you need travel insurance. Look for a policy that will cover you for all the usual things plus cancellation due to Covid-19 restrictions and protection if you get coronavirus. Several insurers now offer full cover, including Trailfinders, Co-op, and LV.

Anyone seeking a new current account may want to consider Nationwide’s FlexPlus account when shopping for travel insurance. For £13 a month you get worldwide travel insurance up to the age of 70 covering medical expenses due to Covid-19 and cancellation cover if you have been diagnosed with Covid-19. You also get worldwide mobile-phone insurance for you and your family, and UK and European breakdown cover. Note that if the government advises against travel to your destination your travel insurance will be invalidated if you still go on your trip.

Lockdown is being eased and rumours of quarantine-free air bridges to allow trips abroad are circulating. But before you book your escape you need to check your travel insurance.

“Insurance companies are introducing so many exemptions that industry experts have expressed concern that thousands will go abroad without adequate cover,” says David Byers in The Times.

If you took out a travel insurance policy for a trip booked before 11 March, you should still be covered for cancellations relating to Covid-19. It was declared a pandemic on that date, so almost all policies taken out after 11 March, or trips booked using annual policies after that date, won’t be covered for any disruption associated with the virus.

Times readers who have received renewal documents for their annual travel insurance “have been alarmed by the exemptions”. In one example, new policy wording from Insure and Go states it won’t cover “any claims caused by or relating to coronavirus disease”.

What’s more, “your policy will no longer cover you if the scheduled airline you booked becomes insolvent”. It goes on to say it won’t cover you if any company associated with your holiday goes bust.To make matters worse you could end up paying a lot more for these travel insurance policies that don’t cover what you need. “Holidaymakers will be forced to consider travelling without insurance this year because premiums are expected to soar when tourism resumes,” says Jessica Beard in The Telegraph.

So, if you are planning a trip what do you do? If you have an annual travel insurance policy speak to your insurer to check what is and isn’t covered. It is highly unlikely you’ll get cover for coronavirus disruption if you book a trip now.

Smaller players return to the market

Nonetheless, there are some small insurers who are starting to offer policies with Covid-19 cover. They include Trailfinders, Staysure, Cover For You, Cedar Tree and Outbacker.

When you are looking for a policy it is more important than ever that you don’t just opt for the cheapest premium. Make sure you are paying for a policy that will actually pay out if you need it.

One exclusion to be aware of with policies regarding corona cover relates to if, and when, you fall ill with the virus. Some policies cover you for emergency treatment and repatriation if you get Covid-19 while on holiday, but not if you contract it in Britain before you travel.

The number of insurers offering cover is expected to rise as lockdown eases. “Insurers are aware that travel insurance is important to raise consumer confidence in travelling,” a spokesperson for the Association of British Insurers told The Times. “More companies will be looking to come back onto the market, and many are still reviewing the extent of their cover.”

The travel industry has been hit hard by the Covid-19 lockdown and some may not survive. If you are booking anything to do with your trip, pay with your credit card: if a company collapses, you have Section 75 of the Consumer Credit Act as a last resort. This law states that if you have tried, and failed, to get a refund for a service that wasn’t delivered from the company involved, you can get your money back from your credit card provider instead.

Car insurance is a must-have legal requirement if you wish to drive on roads across the UK, but many drivers fail to realise even simple mistakes could invalidate a car insurance policy.

Motorists throughout the UK may assume they are fully covered, only to later find out their insurance is invalidated, leaving them unprotected and potentially facing hefty costs or legal issues.

So, how can you ensure your car insurance policy will be valid when you need it most? Here are some important considerations that can invalidate your car insurance - and how best to avoid them.

Does a wrong address invalidate car insurance?

Not letting your insurance company know about a change of address won't always invalidate car insurance, but it is risky.

Keeping personal details, like address and job title, updated prevents issues. If you primarily live elsewhere, update your main address, even if you maintain ties to the old one, to avoid policy disputes.

While the wrong address may not invalidate your car insurance immediately, it could cause problems down the line.

"Your V5 is mainly for the DVLA, but if your address is also wrong on your insurance policy, that's where the trouble starts. Insurers use your postcode to set your premium - so if you're registered at your parents' quiet cul-de-sac but actually park in a city centre, you could be seen as misleading them," suggests Lorna Macpherson, motor insurance expert at Ocean Finance.

If an insurer believes a driver has purposefully provided false information, they may cancel a policy, or could refuse to pay out.

Does wearing flip flops invalidate car insurance?

Flip flops may be your footwear of choice during the summer, but this could have an impact on your car insurance, suggests Mark Wilkinson, managing director at Norton Insurance Brokers.

"Wearing flip flops while driving won't automatically invalidate your car insurance, but if it affects your control of the vehicle and results in an accident, your insurer could refuse a claim. That's why it's always best to wear proper footwear to avoid any risk of being deemed negligent," he explains.

Does travelling with pets invalidate car insurance?

Millions of people like to bring their furry friends along for a ride, but while it is perfectly legal to travel with your pets, they must be properly restrained, or a driver could risk a fine of up to £5,000.

If you're deemed to be driving without care and attention because you are distracted by your pet, you could receive three to nine points on your licence, and void your car insurance.

Insurers are not keen to pay out for those who have an unsecured pet, so investing in a pet carrier or animal seatbelt is wise to keep your insurance policy safe.

Does not having an MOT invalidate car insurance?

There are some cases where not holding a valid MOT could invalidate your insurance, especially if your policy requires your car to be roadworthy.

"If you're driving without an MOT and involved in an accident, your insurer may void your policy, unless you're on the way to a pre-booked MOT test. To avoid any issues, always check your policy and speak to your insurer if you're unsure how an expired MOT could affect your cover," says Mark Wilkinson.

Does driving in bad weather invalidate car insurance?

Bad weather such as snow, wind or fog can disrupt plans and even pose risks, but it doesn't automatically void car insurance.

Insurers urge caution when driving, and say drivers should check their policy for coverage in bad weather. However, reckless driving in severe weather conditions may lead to claim denial.

Can 'fronting' invalidate car insurance?

The practice of "fronting" car insurance happens when someone declares themselves as the main driver of a car, when in reality, someone else will actually be driving the vehicle more often.

It is often done by older, more experienced drivers, such as parents, to give their younger children cheaper insurance costs.

While it may feel like a good way to save money, fronting can actually be classed as insurance fraud, and could lead to a car insurance policy being invalidated.

Both the person named as the policy holder and the young driver could face invalid car insurance, and potentially a criminal record or a driving ban.

What happens if you invalidate your car insurance policy?

Driving if you invalidate your car insurance policy is illegal. It can lead to fines, up to six penalty points, and an insurer refusing to pay out for claims or refund previously paid premiums. Consequently, the driver will have to cover damage or repair costs.

Those who invalidate their car insurance policy may find future insurance harder to obtain, and if insurance is available, premiums will likely be significantly higher.

How to check if you have valid car insurance

To verify your car insurance is valid, you should first check your insurance documents. Insurers typically provide information on coverage dates, and more information can often be found on their website or app.

If you're unsure, you can also call your insurer's customer service helpline to confirm your policy is still within coverage dates.

Many people will set up their car insurance payments through Direct Debit, so ensuring premium payments are being made in this way can help you check if you have valid car insurance.

Finally, some drivers may wish to use an online insurance database, such as the Motor Insurer's Bureau to verify their coverage or that of others.

How to avoid invalidating your car insurance

Keeping your car insurance valid is an ongoing process that will need regular checks to avoid falling into the trap of insurance mistakes, which often come with financial and legal consequences.

One action starts even before you purchase your car insurance in the first place, says Nicholas Shaw, motoring expert at Dayinsure.

"You should ensure you take out the correct policy to begin with. Small details can make a big difference, so take care to fill out your form accurately. If you need short-term cover, or someone needs to borrow your car, choose temporary car insurance."

Any changes should be reported directly to an insurance provider no matter if small or substantial, such as moving house, changing job or parking somewhere different overnight.

Even if you do not wish to claim, make sure you report any bumps or scrapes in the car directly to your insurer.

"Failing to report even minor incidents could invalidate your policy and result in fines of up to £5,000 and five to 10 penalty points. It also leaves you vulnerable if the other party reports the incident to their insurer," says Claire Wills-Mckissick, car insurance expert at Tempcover.

How to reduce the cost of car insurance

There are plenty of simple and legal ways to cut your car insurance costs that don't involve actions that could put your policy at risk.

"Firstly, it makes sense to pay annually. When you pay monthly for your car insurance, insurers will add interest as they view it as a loan. If you can, paying annually for your insurance could save you some money," explains Tom Banks, car insurance spokesperson for Go.Compare.

While you should never lie about your mileage, most people estimate the number when getting a car insurance quote, and could be paying more than necessary as a result. Making sure your prediction is more accurate can be done through looking at old MOT certificates, or tracking your weekly usage.

Discounts, freebies and offers can also help to lower the cost of car insurance, for example, drivers could get a no claims discount and/or families could benefit from multi-car insurance rates.

"It's equally important to check you aren't paying for cover that isn't necessary, so check your add-ons. It might be cheaper to purchase them separately from your standard car insurance, so make sure to shop around," adds Banks.

We look at the cheapest day to buy car insurance in a separate piece.

Paying £1,300 to have excessive earwax removed from your dog's ears is not the kind of expense you want to be saddled with. Unfortunately, if you have pet insurance, your insurer might not pay for it either. The small print of some pet-insurance policies can conceal exceptions that will give you a nasty surprise, as Kate Palmer points out in Sunday Times Money.

Robert and Mary Mirfin from Yorkshire, who had paid for the wax-removal up front, couldn't claim on their insurance policy because they had bought their new policy with insurer More Than through a comparison website, rather than accepting the renewal quote directly from the firm. The insurer treated them as new customers, meaning they were not covered for any illnesses arising with the first two weeks of cover.

More Than ultimately did pay the £1,300 back to the couple after the newspaper got in touch but this episode is a useful reminder that giving customers the best deal tends not to be top of the priority list for insurance companies, so reading the small print is worth your while.

One way around this problem would be to overlap two policies (so one starts two weeks prior to the old one ending), but you'd have to ensure that paying for two policies at the same time didn't wipe out the cost saving of switching.

Pet-insurance policies typically don't cover pre-existing conditions, either. This includes both chronic problems that your pet is suffering from when you take out the policy (the likes of heart conditions or hip dysplasia) and historic conditions (such as healed tissue injuries or illnesses). Next, and perhaps less predictably, routine and preventative treatments are also often excluded spaying and vaccinations, for instance. Finally, expenses associated with pregnancy, giving birth and treatment of any offspring also tend to fall outside the limits of the policy.

Is it worth getting cover?

At the basic end, there's "condition in total cover". This is best for one-off injuries, small surgery after an accident or a short-term illness, which puts a time limit on how long you can claim for a particular condition, and a cap on how much youcan reclaim.

With mid-level cover ("per condition, no time limit"), vets' fees are limited for any one illness, but there's no time limit on how long the treatment lasts. Finally, lifetime policies offer the most comprehensive cover, and are best for long-term illness such as diabetes, arthritis or some cancers that require constant regular treatment. They will insure your pet for illness or injury up to a high maximum amount per year. However, given how much is excluded from policies, you might want to consider just putting aside cash every month (though this does run the risk of not covering costs fully).