Motor insurance premiums return to growth as home prices stabilise in Q1 2026, Defaqto data shows

Motor insurance premiums have increased for the first time in over two years, signalling a potential turning point in the pricing cycle, while home insurance premiums continue to stabilise following a prolonged period of deflation, according to Defaqto Market Pricing’s latest General Insurance Price Index (formerly Pearson Ham Group’s Market Pricing Business; acquired Jan 2026).

The data shows that the average of the top five quoted motor premiums rose by +1.4% over the quarter, reversing the sustained downward trend seen throughout 2024 and 2025. The increase was driven by rises in February and March, offsetting a small decline in January, and marks the first quarter of growth since the end of 2023.

This shift is particularly notable given the scale of reductions seen over the past two years. Although premiums have begun to rise, they remain -6.8% lower than they were a year ago and are still -23.2% below levels seen two years ago. Over the longer term, however, motor premiums remain 9.1% higher than at the start of 2020, reflecting the cumulative impact of claims inflation, regulatory change and wider market disruption in recent years.

Alongside this emerging upward movement, the data highlights a more complex and segmented pricing environment. While average premiums have increased, several major insurers continue to reduce prices, with movements across providers ranging from modest reductions to increases of more than 5% in the quarter. This divergence underscores a shift away from broad-based price competition towards more targeted pricing strategies.

“After a prolonged period of price reductions, Q1 marks a clear shift in direction for motor insurance. While the increases we’re seeing are modest, they are significant as they signal the beginning of a market correction.

“What’s particularly notable is the divergence beneath the surface. While average prices have risen, a number of major insurers are still reducing premiums, reflecting a market that is increasingly segmented. Insurers are now moving away from broad-based price competition and towards more targeted pricing strategies aligned to risk and profitability.

“As we move further into 2026, we expect this trend to continue, with gradual upward pressure on premiums in certain segments as insurers respond to underlying cost dynamics and focus on sustainable margins.”

In contrast, home insurance premiums continued to edge down in Q1, although the pace of decline has slowed significantly. The average premium fell by -0.7% over the quarter, largely driven by a -1% reduction in February, with relatively flat movements in January and March.

This modest quarterly decrease continues a longer trend of falling premiums but also points to a market that is approaching stability. Over the past six months, premiums have declined by -1.5%, but recent monthly increases suggest that downward pressure is easing.

On a year-on-year basis, home insurance premiums are now -9.9% lower than they were in March 2025, while over a two-year period they are approximately -11.5% lower. These figures reflect the sustained competitive environment seen across 2024 and 2025, during which insurers adjusted pricing in response to prior claims inflation and changing market conditions.

As with motor insurance, there is growing evidence of divergence in pricing strategies. While the overall average continues to fall slightly, many of the largest providers increased prices during Q1, with reductions from other insurers keeping the aggregate figure in negative territory. This reflects a market that is no longer moving in unison, with insurers pursuing differing approaches depending on their portfolios and strategic priorities.

“The home insurance market is clearly approaching a point of stability. While premiums are still edging down overall, the small movements we’ve seen in recent months suggest that insurers have largely recalibrated their pricing following the sharp adjustments of the past two years.

“What’s interesting is that, despite the average continuing to fall slightly, many of the largest providers are now increasing prices. This indicates that competitive dynamics are shifting, with smaller or more agile players continuing to drive down averages.

“The key question for the remainder of 2026 will be whether external pressures, such as weather-related claims or inflation in repair costs, begin to push premiums upwards again. For now, however, the market appears finely balanced.”

Taken together, the Q1 data indicates that the era of widespread premium reductions is coming to an end. The return to growth in motor premiums and the stabilisation of home insurance pricing suggest the market is entering a more disciplined phase, characterised by targeted pricing, greater segmentation and a renewed focus on profitability.

“The era of widespread premium reductions is drawing to a close. What we’re seeing now is the early stage of a more disciplined market, where pricing is increasingly driven by underlying risk and strategic intent rather than competitive pressure alone.

“For consumers, this means the sharp declines of recent years are unlikely to continue. For insurers, it marks a transition towards a more sustainable operating environment, albeit one where competition remains intense and highly targeted.”