The home insurance market – February 2025

The home insurance market – February 2025 update

Last year we advised that the insurance market, specifically the UK home insurance market, had changed over the last few years and that we were experiencing a hard market. A hard market is brought about by a reduction in insurers’ capacity and their appetite to write insurance.

Twelve months on we still find ourselves in the midst of a hard market, but there are green shoots. Here, Client Director Steve Moores, takes a closer look at what this means for consumers.  

What caused the hard market?

According to an Ernst & Young (EY) report, the UK home insurance market had its worst year on record in 2022, heavily impacted by major weather events, high inflation, supply chain pressures, and an increase in claims frequency.

The latest EY report indicates that UK home insurers remained in the red in 2023, with only a slight improvement over 2022.

• UK home insurers recorded a Net Combined Ratio (NCR) of 118%in 2023, indicating that for every £1 in premiums, they paid out £1.18 in claims and expenses. This was a slight improvement from the 122% NCR in 2022
• The industry faced significant challenges due to supply chain pressures, high inflation, and increased claims frequency. These factors contributed to the continued loss-making trend
• To cope with these challenges, consumer premiums are expected to rise. The average written premiums are forecasted to increase by 19% in 2024and a further 7% in 2025

Matthew Wheatley, UK General Insurance Partner at EY, commented:

“2023 was another challenging year for the UK home insurance industry. Although inflation began to ease, claims frequency remained high and supply chain issues persisted, leading to significant losses for firms. As a result, some costs will need to be passed on to customers. We anticipate that firms will move closer to profitability in 2024 and 2025, provided inflation continues to stabilise.”

Green shoots of recovery

There are green shoots appearing with insurer capacity gradually appearing and indexation figures costs under control. But the hard frost of the January 2025 and the California fires may have stunted their growth. Time will tell.

What does this mean for consumers?

Premium increases will remain a challenge, but this will be coupled with some customers not being offered a renewal. 

• Insurers, such as Home & Legacy, Aurum, RSA and Horizon left the market in 2024. Zurich stopped writing standard home insurance but still offer high net worth insurance policies.
• We’re finding an increasing number of clients being refused a quote for insurance due to a less than perfect claims history. For example, one escape of water claim in five years may make it difficult to find home insurance, and even a single recent claim may make it difficult to move insurers.  If you’re finding it difficult to find home insurance due to your claims history then read our article: Is your claims history affecting your home insurance
• “Blanket cover” policies are being withdrawn from the market, partly because the buildings blanket cover sum insured is no longer enough. You can read more about these policies in our article Unlimited building insurance policies
• Homeowners with five or six bedroomed properties may not be offered a renewal as the higher rebuild costs means they no longer fall into the insurers appetite. Essentially they have ‘outgrown’ a standard home insurance policy.

Policies for high value homes and contents

If you haven’t being offered a renewal due to the size of your property or value of your content then you should consider switching to a high or mid net worth policy.  These policies are designed to protect higher value properties and contents, and will have higher single article limits and inner limits for things like alternative accommodation, finding a leak, art and jewellery. The policies are usually “All Risks” which means that there’s wider cover for more eventualities. They can also include cover outside your home for all of your contents, fine art and jewellery.

How Howden can help

A hard market doesn’t mean a hard no. Now more than ever is the time to ensure a broker is working hard to get you the right home insurance policy.  By using our extensive market knowledge, leverage, and relationships we can negotiate with insurers to get you a good and fair price.  And if you’ve been refused insurance due to a previous claim, we’ll break down the insurance cover required and negotiate with insurers.

To speak to us about your home insurance, call 020 8256 4901 or email privateclients@howdeninsurance.co.uk