The UK mutual insurance sector posted broad asset and premium recovery in 2025, according to Broadstone's analysis of Solvency and Financial Condition Reports filed by Association of Financial Mutuals members and comparable firms. The recovery is real - but the findings contain a structural tension that the government's ambition to double the sector will need to resolve: claims grew faster than premiums across most participants, and the median claims figure of £37 million now sits just £2 million below median gross written premium of £39 million. A sector asked to double in size on that financial trajectory faces a different set of challenges than the headline asset recovery figures suggest.
The four largest participants averaged a 5% asset increase in 2025, against an average decline of 2% in 2024. The remaining group averaged a 5% gain, up from 1% the prior year. Participants reporting declining assets fell to five from 12 in 2024 - a significant improvement in spread as well as direction.
GWP growth was broad-based. Median GWP rose to £39 million from £37 million in 2024, with average growth reaching 6% for the four largest and 13% across the remaining group. Eleven participants recorded GWP growth in excess of 10%, outpacing the four largest by seven percentage points - a sign that smaller mutuals are growing faster from a lower base, which is consistent with a sector that still has significant headroom relative to the wider UK insurance market.
Investment conditions were broadly favourable during the period and provided support to earnings. Ewen Tweedie, actuarial director in Broadstone's insurance advisory and remediation division, said "across the market, momentum was evident in 2025 with firms focused on supporting members through higher claims activity whilst benefiting from broadly positive investment performance. Equities performed strongly, while fixed income delivered mixed results depending on duration."
The more challenging finding sits in the claims data. Gross claims rose for most participants at a faster rate than gross written premiums. The median reached £37 million in 2025, up from £31 million in 2024 - a 19% increase against median GWP growth of approximately 5%. Broadstone noted that claims in excess of premiums can indicate growth challenges, or may relate to long-term business supported by historical investment returns, but the direction of travel warrants attention in either case.
That claims pressure has a specific driver visible in the wider market data. The UK group risk sector paid a record £2.69 billion in claims in 2025, according to GRiD. The government's Keep Britain Working Review found one in five working-age adults is currently out of work, with poor health the leading cause - a worklessness pattern that flows directly into the protection and income-related claims mutual insurers manage. Swiss Re's Group Watch 2025 records 94,675 in-force group risk policies covering 15.7 million people, a population whose health and income protection claims are materially shaped by the same economic and demographic pressures bearing on the mutual sector.
"Mental health is having a growing impact on individuals and workplaces, underlining the importance of prevention, early intervention and staying connected to work," Tweedie said. He added that mutuals have an important role in supporting members and communities through these challenges - which is precisely the role the government's doubling ambition is predicated on, and precisely the role that becomes harder to sustain if claims continue to outpace premium income.
Broadstone said the analysis points toward proportionate supervision and lower regulatory burden as necessary conditions for the sector growth the government wants. That framing is correct as far as it goes, but the claims-to-premium dynamic suggests the more important condition is whether mutuals can grow premium income fast enough to keep pace with claims exposure as health and worklessness pressures persist.
Tweedie flagged potential headwinds for the year ahead. "There may be some turbulence due to factors ranging from political instability within the UK to geopolitical tensions driving increased cost of living pressures," he said. For a sector whose doubling ambition depends on financial resilience as much as regulatory accommodation, those headwinds bear directly on whether 2025's asset recovery marks a durable turning point or a single favourable year in a more challenging structural trajectory.
