House insurance likely to rise 10 per cent - Tower

Rob Flannagan. Photo / Martin Sykes

The cost of house insurance is likely to rise by 10 per cent this year, says insurance company Tower.

Speaking at the company's annual results yesterday chief executive Rob Flannagan said he expected to see an increase of 10 or 11 per cent because insurance companies were losing money on house cover.

"It's the cost of building repairs. The industry has been losing money in the house market and that has to adjust."

Mr Flannagan said Tower's house insurance business had been unprofitable for five years.

While he was not about to announce a price rise for Tower's policies, Mr Flannagan warned the company would be competitive if others chose to increase their prices.

"We will make the appropriate changes to ensure we are competitive."

At the same time Mr Flannagan said the company was worried about losing customers in the current economic environment if it did increase prices.

Mr Flannagan also said life insurance prices were likely to go up by close to 30 per cent over the next five years because of changes to the way the industry is taxed.

The changes are due to come in next year but Mr Flannagan said a five year "grandfathering" period meant it was likely to be spread over that time.