UK home insurers sitting in the red – and further losses are expected

The UK home insurance market delivered a loss-making net combined ratio (NCR) of 118% during 2023, new figures from EY have revealed.

According to the firm’s UK Home Insurance Results Analysis, published yesterday (21 October 2024), UK home insurers paid out £1.18 in claims and expenses for every £1 in consumer premiums during 2023.

The issue stems from storms during the year, as well as ongoing supply chain pressures, increased claims frequency and high inflation.

Matthew Wheatley, UK general insurance partner at EY, said: “It was another challenging year for the UK home insurance industry in 2023.

“Although inflation began to ease last year, claims frequency was high and supply chain issues remained, meaning firms faced another year of significant losses.”

Further losses

Further losses are also forecast for 2024 – according to EY, this year is estimated to see an NCR of 108%.

In turn, EY warned that average consumer written premiums could increase by 19% in 2024.

Provided market conditions continue to ease and weather events remain at average levels, firms are expected to record an NCR of 100% in 2025.

Martina Neary, UK insurance leader at EY, said: “2024 will ultimately be another difficult year for both firms and for customers.

“Firms will need to carefully balance a range of challenges, from supporting customers facing financial difficulty, to investing in critical growth areas such as digital transformation and navigating uncertainty around climate change.”