Competitive home insurance premiums are still falling, even as insurers face record subsidence claims and fresh weather risks, according to Defaqto.
The average of the five most competitive quoted premiums for combined buildings and contents cover was 4.4% lower in September than a year earlier, according to Defaqto’s latest Market Pricing data. Prices are now 16.9% below where they stood two years ago.
Prices fell 2.4% in the third quarter, with reductions in every month: 1.0% in July, 0.9% in August and 0.4% in September. A rise in June did not become a lasting trend, but the shrinking monthly falls suggest prices may be nearing a floor.
Stephen Kennedy, director at Defaqto, said the continued falls created a difficult balance for insurers while inflation and uncertainty over claims costs persist.
“Continued market reductions should prompt insurers to examine whether their pricing adequately reflects the claims costs they expect to incur,” said Kennedy.
He said weather-related claims were a particular concern. Subsidence after hot, dry summers can take time to emerge, while flooding and storms add further uncertainty.
That warning lands in a costly year. Subsidence claims hit a record in August at some insurers, as Insurance Business reported last month, after the hottest summer on record. Severe drought was declared across parts of southern England this month, raising the prospect of soils staying dry into winter. Deloitte has forecast UK home insurers will post a combined ratio of 102.1% in 2026, an underwriting loss.
The market-wide average hides big differences. Over the 12 months to September, individual providers’ price movements ranged from a 20.2% cut to a 12.1% rise. In the third quarter alone, some cut prices by up to 15.7%, while others raised them by between 1.8% and 3.5%.
Francis Luery, product manager at Defaqto, said the variation reinforced the value of shopping around at renewal and comparing cover, limits and excesses as well as price.
Defaqto said prices could level off or start to rise towards the end of 2026, though its data does not yet show a sustained change in direction. Kennedy said he would not expect a major movement in the next few months, but that the outlook for 2027 depended heavily on claims experience.
The picture contrasts with motor. Defaqto’s motor index showed competitive premiums ended the third quarter 2.7% higher than a year earlier, the first annual rise since 2023. Moody’s said last week that home insurance prices were still softening, and warned that falling prices would compress property and casualty margins from 2027.
For brokers, the soft home market is good news for clients at renewal, but it brings risks. With providers’ prices moving in opposite directions by as much as 30 percentage points over a year, the gap between the cheapest and dearest quotes is wide, and shopping the market can still find real savings.
The bigger concern is sustainability. If prices are running ahead of claims costs, insurers are likely to correct, and those who have cut hardest may move first. Brokers should warn clients that this year’s reductions may not continue into 2027. They should also make sure clients aren’t trading away important cover, such as subsidence protection, flood cover or adequate excesses, for a lower premium, particularly in clay-soil and flood-risk areas.
