The Intermediary – August 2026 - Flipbook - Page 76
P RO T E C T I O N
Opinion
Pressure is
building on home
insurance pricing
H
ome insurance
pricing is proving
harder to call than
it looked only a few
months ago.
Aer almost
two years of falling premiums,
June appeared to offer the first clear
indication that the cycle might be
turning. Defaqto Market Pricing
recorded a meaningful increase in
competitive home insurance prices
that month, following progressively
smaller reductions earlier in the year.
But July and August have changed
the picture again. Prices have fallen
in both months, showing that June
was not – at least yet – the beginning
of a sustained upward trend. This
maers, because it tells us that
competition remains powerful
enough to keep downward pressure on
premiums even while the underlying
cost of providing home insurance
remains elevated.
Home insurance has gone through
considerable pricing volatility in
recent years. Premiums rose sharply
as insurers responded to inflation,
higher repair bills and other external
shocks, before competition returned
and pushed prices back down.
The question now is whether
that downward cycle still has
further to run, against our
previous expectations.
Our latest observations suggest the
market is reaching a more balanced
position rather than moving decisively
in either direction.
Individual insurers are taking
different approaches. Some still have
the appetite and margin to compete
aggressively for new business, while
others may need higher rates in
order to reflect their own claims
experience and portfolio economics.
That divergence is likely to become
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The Intermediary | August 2026
increasingly important. We
should therefore be cautious about
looking for a single market-wide
turning point.
The next phase may instead be
characterised by modest headline
movements masking much larger
differences between individual
providers and customer segments.
What makes the current position
particularly interesting is the gap
between premium movements and
claims costs. Competitive premiums
may still be falling, but the cost
environment has not moved in the
same direction.
Official Government figures show
that construction materials for repair
and maintenance were 5.7% more
expensive in June than a year earlier.
Insurers also continue to contend with
labour constraints, repair delays and
higher rebuilding costs, all of which
can feed directly into the severity of
home insurance claims.
Future movements
The broader industry outlook
underlines that pressure. EY expects
average home insurance premiums
to decline by around 3% during 2026,
while forecasting that the market will
make an underwriting loss.
That combination cannot
continue indefinitely without
consequences. Either
claims costs ease,
insurers become
more selective
about the risks
they want to
write, or some
providers
eventually need to
increase rates. The
timing will differ
by insurer. For
intermediaries,
STEPHEN KENNEDY
is director at Defaqto
Market Pricing
the more important development may
be the growing variation in pricing
between insurers, rather than any
broad-based increase in premiums.
Where insurers have different
views of risk and profitability,
customers can receive increasingly
different prices for broadly similar
cover. That creates an incentive to
shop around and gives intermediaries
an opportunity to demonstrate the
value of wider market comparison.
The key question for the remainder
of 2026 is therefore not simply
whether home insurance prices will
rise or fall. It is how long insurers can
maintain intense price competition
while repair, rebuilding and claims
costs remain under pressure.
For now, competition is winning.
But the tension underneath
the headline price is becoming
increasingly difficult to ignore. ●
