UK insurers to be profitable in 2026 amid ‘steady but subdued’ global growth – Moody’s Ratings

The outlook for the UK property and casualty (P&C) market in 2026 is “stable”, with ”steady but subdued” global macroeconomic performance contributing to continued insurer profitability.

This is according to credit rating agency Moody’s Ratings’ Property and Casualty Global Outlook 2026 report, which also highlighted a set of key drivers that will contribute to the global market’s growth this year.

These included improvements in personal lines profit margins, profitable commercial lines pricing, continuously strong investment incomes and the enhancement of competitiveness through the growing adoption of artificial intelligence (AI).

Meanwhile, it suggested factors that have the potential to cause volatility in the market include pricing declines, rebounds in claims inflation, reserve developments across lines and exposure to natural catastrophe risk.

Easing inflation

In the UK specifically, Moody’s Ratings highlighted that inflation has been easing in line with the Bank of England’s targets, increasing the likelihood of a corresponding slowing of claims inflation.

It also identified the UK as one of the markets which had already experienced large pricing falls in 2025 – driven mainly by motor insurance premium drops – and although the trend is set to slow across 2026, combined operating ratio (COR) will likely remain above 100% in the motor market for the next 12 months.

The report also forecasted that AI uptake would likely have a big impact on the market, suggesting that it expects “investment in AI and deeper integration of the technology to remain a strategic priority for insurers to improve operational efficiency and customer service”.

“However, major concerns remain around data quality, model transparency and cyber risks,” the report warned.