Speaking at last week's National Housing Federation housing finance conference, experts said overall insurance costs could increase 20-25% in the next two years, but would level out in the year after that.
This year, a typical 750-home general-needs RSL based in Manchester saw premium rises from £45,000 to £58,000. Insurers described this as a typical rise.
Mark Evans, director at risk and insurance management firm Farr, said: "Overall premium inflation is running at about 10-15% but reassessment of the sector by underwriters could mean individual associations pay more."
But he said increases would depend on the balance of different types of insurance an RSL had – for example, the amount of employer's and public liability cover, motor insurance or liability for bricks and mortar.
He said motor insurance would remain steady but property owners' liability claims, which include tenant claims for accidents or ill health because of their living conditions, would see the biggest rises, as solicitors encouraged tenants to bring cases.
He said RSLs should reduce the number of claims in order to lower their insurance costs and control their risks better, for example by keeping records of checks and repairs.
"If you have a tenant who says damp has caused illness but you have inspection records that show extractor fans were working and you had told the tenant not to dry clothes indoors, you have a defence," Evans said. RSLs should also repair damage before accidents happen, he added.
RSLs can also self-insure by assessing their likely risks and keeping money aside to cover them, he said. They could also take out a bank loan if they were hit by a large claim.
However Paul Harrison, director of housing finance at Bank of Scotland, said this option was only open to RSLs with strong balance sheets who had fully assessed their risks.
He said taking out a loan to pay off a liability was "a bit like double jeopardy".
The National Housing Federation plans to set up a meeting between insurance companies and a group of housing associations who are interested in setting up their own insurance scheme, called a "captive" scheme (HT 21 February, page 14).
What delegates were talking about
“If you are a poor sector and rebrand for the sake of it, it will go down in flames” – Richard McCarthy, NHF chair and chief executive of the Peabody Trust“The future is not mapped out and it is not clear. We’ve already had discussions with lenders to assure them that what we’re doing is not prejudicial to their existing regimes or likely to cause them to up their rates” – Martin Palmer, lead housing inspector, Audit Commission>
“There will be 1.8 million more elderly people by 2020. This means greater demand for sheltered housing. They will be a great big black hole, sucking up resources. People will be hugely under-prepared for the impact this will have” – Joe Saxton, driver of ideas, nfp Synergy/Future Foundations
“We will be pushing for more resources. There still isn’t enough. Many RSLs have older stock than local authorities, yet there is nothing in the Communities Plan to help RSLs to meet the decent homes standard” – Richard McCarthy, NHF chair and chief executive of the Peabody Trust
“Something equivalent to Enron couldn’t happen in social housing, but that’s not to say there couldn’t be a collapse” – David Montague, finance director, London & Quadrant
Source
Housing Today
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