UK home insurers expected to fall back into the red in 2026

The UK home insurance market is expected to return to loss-making territory in 2026.

That is according to the latest EY home insurance results analysis, which said that rising costs, market competition and geopolitical risk are all likely to contribute to a higher net combined ratio (NCR) for the market this year.

Analysis of full year results to date forecasts an NCR of 98% in 2025, following two years of losses.

However, insurers are forecast to report an NCR of 103% in 2026, meaning that for every £1 taken in consumer premiums, insurers are likely to pay out £1.03 in claims and expenses.

EY also noted that after two years of premium rate increases to offset earlier inflationary spikes, the home insurance market began to see rates soften in early 2025.

This trend is expected to continue into 2026 as competitive pressures increase, which will likely lead some carriers to keep premiums low in order to drive volume and scale.

EY expects average written premiums to fall 3% by the end of 2026, making an average policy £10 cheaper at £320, compared to £330 in 2025 and £329 in 2024.

’Renewed challenge’

Dan Beard, EY UK insurance partner, said: “After a welcome return to profitability in 2025, the UK home insurance sector is facing renewed challenge this year. Rising claims costs and intense competition are squeezing margins, leaving many insurers with limited room to manoeuvre.

“The current heightened geopolitical uncertainty adds another layer of complexity. Potential disruption to supply chains, higher fuel and energy costs and broader wage and price pressures are likely to be felt by households and insurers alike, which could drive claims costs above current projections in the months to come.

“Now more than ever, insurers need to strike a careful balance between cost discipline and continued transformation, so they can grow sustainably and deliver long-term value for customers.”