From a shopper perspective, costs eased. In motor, the ABI reported that the common value truly paid fell for 3 consecutive quarters by way of 2025, reaching £551 in Q3. On the aggressive finish of the market, our personal information reveals simply how intense competitors turned: new enterprise costs within the prime 5 value positions on value comparability websites fell between January and November, by round 3.5% in motor and greater than 11% in dwelling.
However falling costs didn’t imply pricing strain eased for insurers.
One of many defining options of 2025 was that there have been merely fewer prospects in play. Purchasing volumes had been down materially in contrast with the peaks seen in 2024, shrinking the pool of recent enterprise obtainable.
Client Intelligence information reveals this clearly. Within the the primary three quarters of 2025, 68.6% of dwelling insurance coverage prospects shopped round, down from 77.8% in the identical interval in 2024. In motor, 71.6% of shoppers shopped round, in contrast with 83.2% a 12 months earlier. Fewer lively consumers meant insurers had been competing tougher for a shrinking pool of recent enterprise.
On the identical time, more and more stripped-back merchandise and tighter cowl ranges stored headline costs low on the aggressive finish of the market. In a market with fewer prospects, that mixture pressured insurers to compete tougher on value, regardless of already skinny margins.
Crucially, this performed out in opposition to a backdrop of persistent and extreme claims value strain, which didn’t ease as costs fell. In motor, restore prices continued to rise as autos turned extra complicated, elements and labour remained costly, and theft added additional pressure. The FCA’s Motor Insurance coverage Taskforce, reporting in late 2025, bolstered this level, concluding that rising premiums in recent times had been pushed by exterior claims value pressures fairly than insurer income, and highlighting the necessity for larger claims effectivity fairly than additional value intervention.
In dwelling insurance coverage, claims volatility was much more seen. Insurers paid out a report £4.6bn in property claims within the the primary three quarters of 2025, pushed largely by extreme climate. Late-year storms bolstered a wider development: excessive climate is not an outlier, and sizzling, dry summers adopted by heavy rainfall improve dangers resembling subsidence in addition to flooding.
Overlay all of that with continued market consolidation, most notably Aviva’s acquisition of Direct Line, which displays the necessity for scale and effectivity in a low-growth, high-cost surroundings, and the image of 2025 turns into clear. Aggressive costs fell, the pool of shoppers shrank, claims prices stayed excessive, and strain on insurer profitability intensified fairly than eased.
That mixture issues as a result of it shapes how the market behaves subsequent.
The bottom case for 2026: modest averages, however uneven outcomes
Towards that backdrop, the headline outlook for 2026 seems to be comparatively calm.
In motor, the broad market consensus is that premiums rise once more, by round 3% on common, after easing by way of 2025.
In dwelling, the path is much less about costs rising sharply and extra about them not falling additional. Rebuild value inflation has slowed, and reinsurance situations have been much less hostile, however current climate losses make sustained declines tough to justify.
Put merely, throughout each markets; common premiums are more likely to edge up solely barely.
However that calm is deceptive.
Claims prices stay structurally excessive; climate threat is turning into extra frequent fairly than distinctive, and insurers are taking totally different strategic positions on progress, margin and threat. The result’s continued variation in what particular person prospects see at renewal, by postcode, car, property sort and insurer urge for food.
And that variation, not the headline common, is what drives behaviour.
Why behaviour follows renewals, not market averages
Shoppers don’t reply to what “the market” is doing. They reply to their very own renewal.
Switching ranges throughout each dwelling and motor are already low by historic requirements, reflecting pricing reforms, lowered financial savings from procuring round, and a larger deal with service and claims expertise.
Client Intelligence information reveals that 35% of each motor and residential policyholders switched insurer within the the first three quarters of 2025, reinforcing simply how muted churn has change into throughout each markets. This low‑switching place to begin issues.
The place renewals are steady, prospects are far much less inclined to have interaction. The place renewals transfer sharply, procuring returns shortly, even when the common premium barely modifications.
We noticed that sample clearly in 2025. The proportion of shoppers receiving renewal will increase continued to fall over the 12 months, serving to to suppress procuring and switching total.
By Q3 2025, the proportion of drivers receiving a renewal improve had fallen to 46%, down from 68% for a similar interval simply two years earlier.
However volatility by no means disappeared. Some prospects nonetheless noticed massive modifications, and people had been the purchasers almost certainly to buy.
The identical dynamic applies in dwelling insurance coverage, with a unique set off. Pricing reforms lowered the normal loyalty penalty, dampening price-led switching. However claims expertise, notably following climate occasions, stays a strong catalyst. In a low-switching market, a poor claims end result can immediate prospects to maneuver even when value variations are comparatively small.
Throughout each markets, the behaviour is constant:
- Secure renewal → low engagement
- Sharp renewal motion → fast procuring
That’s the reason averages are such a poor information to what truly occurs subsequent.
What this implies for the market in follow
If averages keep comparatively calm, however outcomes stay uneven; the implications are sensible fairly than theoretical.
Development turns into much less about headline fee modifications and extra about share motion. When the market solely strikes a couple of per cent total, who wins and loses prospects issues greater than market dimension progress.
Count on continued dispersion by model and quick rotation on comparability websites. Completely different insurers will make totally different trade-offs between progress and margin, producing fast winner-and-loser cycles in particular segments fairly than a single, tidy market development.
Underwriting self-discipline turns into extra focused. In dwelling insurance coverage, meaning sharper differentiation by postcode and threat, alongside extra emphasis on prevention and resilience. In motor, it means an excellent stronger deal with claims management, together with restore pathways, fraud detection and automation, not as a expertise story, however as a price and buyer outcomes story beneath ongoing regulatory scrutiny.
Comparatively steady pricing opens the door to propositions past single-product value. With churn decrease and acquisition prices excessive, insurers are more likely to push tougher on multi-product relationships, notably dwelling and motor collectively, competing on worth, service and ease fairly than value alone.
Closing thought: why Client Intelligence issues in 2026
In a 12 months like 2026, technique doesn’t succeed or fail on the common premium. It succeeds or fails on what occurs beneath it.
Which segments are heating up?
The place is churn quietly returning?
Which opponents are pushing for quantity, and that are pulling again?
And, most significantly, what’s truly driving or impeding your personal model’s efficiency?
That’s the place Client Intelligence is available in. We don’t simply observe headline costs. We give insurers a full-context view of the market as prospects expertise it, how pricing is shifting by phase and postcode, who’s profitable and shedding on the comparability websites, and what’s actually driving procuring and switching. That visibility permits insurers to behave early, adjusting pricing, propositions or technique, fairly than reacting after share has already moved.
In a market that appears calm on the floor however noisy beneath, context shouldn’t be a nice-to-have. It’s the distinction between reacting late and competing effectively.
