UK home insurers brace for 2026 losses as premiums set to fall
British home insurers are set to finish 2025 in the black, but losses are expected in 2026.
According to data exclusively shared with Morning Wire by Deloitte, UK home insurers are set to make an underwriting profit in 2025, with a net combined ratio (NCR) of 98 per cent. For every £1 taken in premiums during the year, home insurers will have paid out 98p in claims and expenses.
The insurers have had to deal with high inflation, increased claims from extreme weather (like storms Babet and Ciaran), and ongoing supply chain issues. The insurers paid £1.6bn in property claims in Q2 2025 alone due to storms and weather events, and £4.6bn in the first nine months of 2025.
These issues have been dragging on for the past few years, and as a result, premiums have increased significantly. However, according to Deloitte, average premiums have remained steady in 2025, falling to £326 for the year, compared to £329 in 2024.
Competition heats up
Deloitte forecasts that in 2026, consumers will see a notable drop in their premiums, which are set to decline seven per cent to £306, driven by a further decrease in claims and a competitive UK market.
Cherry Chan, partner at Deloitte, said: “Home insurers will have breathed a sigh of relief at the relatively mild weather so far this winter, leading to fewer claims compared to this time last year.”
Throughout 2025, the UK as a whole has remained below average for rainfall, reaching its driest point at the end of Summer, according to the Met Office.
Chan pointed out that, with subsidence claims expected to surge this year from this very dry summer, there may still be a sting in the tail for 2025, while insurers will also have one eye on the weather in the first quarter of 2026.
But the weather is not the only issue insurers need to be worried about. Chan explained, “The market remains competitive, however, and insurers need to both hold on to existing customers and attract new ones.”
“As a result, premiums are expected to fall in 2026, also leading to a consequent fall in underwriting profitability. Winning firms will be those that continue to focus on delivering outstanding service to customers, while doubling down on operational efficiency,” she added.
This comes as the UK financial watchdog revealed last week it is to increase scrutiny of home and travel insurers following a “super complaint” by consumer champion Which? over ‘falling standards’.