10 years ago, if you had applied to an insurer for household insurance with a bungalow built in the 70s with a reasonable percentage of flat roof area near a watercourse, you would probably have been able to get their standard buildings and contents cover at a reasonable premium.
Today, most of the major insurers wouldn’t even quote on this risk.
Advances in technology have allowed them to use data enrichment techniques to drill down into what business they want to target. As a result, what insurers classified as a non-standard residential property ten years ago bears no resemblance to what are classified as non-standard today.
Given flood events over recent years, it’s probably not surprising that any property with a history of flooding or that lies within 400 metres of the nearest watercourse falls into the non-standard net. That net however now encompasses any property within 5 metres of any trees taller than 10 metres, or homes that have ever shown sign of or have been monitored for subsidence, landslip or heave.
Eco-build properties are likely to be classified as non-standard as their exterior walls are made of non-standard materials, and this could also capture older properties such as thatched cottages with cob or wattle and daub walls. And of course any property that has a roof made up of anything other than tile or slate is also considered non-standard.
Entrepreneurs working from home but receiving visitors could also find their property considered non-standard – with the increasing number of small start-up businesses this could start becoming a real problem for a fair number of households.
The more worrying trend that we’ve identified here at The Source is that if a homeowner calls to enquire about whether they could make a claim for an incident or damage to their property, that reveals a propensity to claim – and many insurers appear to be putting these homeowners into the non-standard basket. I find that truly alarming. Given the severe weather over recent months, how many homeowners will have made a call to check whether something is or isn’t covered rather than trawl through their policy document?
We know from our own analysis that thousands of quotes did not complete last year as a result of non-standard rejection and that around 40% of properties now fall under the non-standard banner.
This is going to become a major problem for a significant number of homeowners who, if they go to the comparison sites, are likely to only receive quotes from complete unknowns and non-UK insurers. However that does mean there is a significant opportunity for intermediaries to help their clients so long as there are providers out there willing to support them. It’s something that we at The Source are working on – so watch this space!
Brian Coulton is national sales manager at Source Insurance
