Home insurance premiums continue falling

Competitive home insurance premiums fell by 4.4% in the year to September 2026, according to the latest Defaqto Market Pricing data, despite ongoing inflationary pressures and uncertainty surrounding property claims costs.

The average of the five most competitive quoted premiums for combined buildings and contents insurance is now 16.9% below its level two years ago, highlighting the continued downward movement in pricing.

Premiums fell by 2.4% during the third quarter, with monthly reductions of 1% in July, 0.9% in August and 0.4% in September. The slowing rate of decline suggests prices could be approaching a more stable position.

Stephen Kennedy, Director at Defaqto, said: “Competitive home insurance premiums are almost 17% below their level two years ago and are still falling. That creates a difficult balance for insurers when inflationary pressures and uncertainty over claims costs remain.”

He highlighted weather-related property claims as a particular concern, with subsidence following prolonged hot and dry conditions potentially taking time to emerge, alongside continued exposure to flooding and storms.

Stephen added: “There is an argument for premium increases to reflect those pressures. Continued market reductions should prompt insurers to examine whether their pricing adequately reflects the claims costs they expect to incur.”

Defaqto’s analysis also identified considerable variation between insurers. Annual pricing movements ranged from reductions of 20.2% to increases of 12.1%, while quarterly changes included reductions of up to 15.7% and increases of up to 3.5%.

Francis Luery, Product Manager at Defaqto, said: “The 4.4% annual fall is a useful measure of competitive market pricing, but individual providers have taken very different paths. Some have made substantial reductions, while others are quoting above their levels a year ago.”

Defaqto believes home insurance premiums could stabilise or begin increasing towards the end of 2026, although current data does not indicate a sustained reversal.

Stephen said the outlook for 2027 would depend heavily on claims experience, with more substantial pricing adjustments potentially necessary if weather-related losses and wider cost pressures increase.