EY has forecast the UK home insurance market will return a net combined ratio of 103% this year, following the 98% it achieved in 2025. It said competitive pressures would push premiums down by 3%, making an average policy £10 cheaper at £320. This compares to £330 in 2025 and £329 in 2024.

The market experienced an 85% jump in subsidence claims in 2025, but the impact from storm and flood events was 18% below the 10-year average. EY also said the market saw a drop in high frequency claims such as escape of water, accidental damage and theft.

Despite the fact that claim volumes have fallen by 36%, EY said the total amount paid out by UK insurers had more than doubled (+126%) since 2020. It cited higher costs for materials, labour and specialist repair services as the main drivers.

Dan Beard, UK insurance partner at EY, 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.”