Home and motor premium income set to slow as sharp price rises ease

Home and motor premium income is expected to slow over the next few years, according to new figures by EY.

The professional services firm’s club outlook for the financial market, published today (12 November 2024), said inflation was falling and that the supply chain environment was improving.

In turn, EY said that sharp rises seen across general insurance premiums in recent years were beginning to ease.

As a result, home and motor premium income is expected to grow by 7.9% this year, a decline from the 8.8% seen in 2023.

And growth is projected at 5.1% in 2025 and 4.5% in 2026.

This means that premiums will remain just above the average growth rate of 4% recorded between 2010 and 2019.

‘Turning a corner’

Martina Neary, UK insurance leader at EY, said the figures showed that the price of premiums were ”turning a corner”.

She added: “The macroeconomic environment has been very challenging in recent years and insurance premiums increased sharply to balance cost and inflationary pressures in 2023 and much of 2024.

“With inflation and interest rates now falling, we appear to be turning a corner and we expect the rate of premium increases to ease if cost pressures continue to lower, bringing premium income growth to more ‘normal’ levels over the coming years.”

However, she warned that the ”ongoing geopolitical tensions and unpredictable weather events present downside risks to the growth forecast”.

Neary continued: “As ever, the challenge for UK insurers will be to carefully balance costs, provide support to customers – especially those most vulnerable – and accelerate innovative transformation programmes to ensure firms remain competitive into the future.”