Home Insurance Premium Falls Slow Sharply as Market Shows First Signs of Turning

Home insurance premium reductions slowed markedly during the second quarter of 2026, with prices rising in June and most major providers increasing rates, according to the latest Defaqto Market Pricing data.

The average of the five most competitive quoted premiums for combined buildings and contents insurance fell by -0.7% during Q2. Prices reduced by -0.4% in April and -1.2% in May before reversing direction with a +1% increase in June.

The June rise was the first meaningful monthly increase observed by Defaqto in the home market during the recent period of falling prices. While one month does not establish a sustained trend, it may indicate that the prolonged period of home insurance premium deflation is beginning to end.

Prices have fallen by -1.3% over the past six months, representing a significant slowdown from the reductions recorded during the previous two years.

Quoted premiums remain -7% below their level in June 2025 and -14.4% lower than two years ago. However, the rate of reduction has eased considerably, and Defaqto believes upward movement is likely in the coming months if the historic relationship between home and motor pricing cycles continues.

“Home insurance pricing reached an important turning point during the second quarter. The overall market recorded another modest reduction, but the 1% rise in June and the increases introduced by most large providers indicate that the direction of travel is changing.

“The sustained falls of the past two years have now slowed substantially. Competitive pressure remains strong, but insurers are increasingly having to balance that competition against the need to maintain sustainable margins and reflect the underlying cost of providing cover.

“Historically, movements in home insurance pricing have tended to lag behind motor by several months, both when prices rise and when they fall. If that pattern holds, June could be the beginning of further upward movement, although we will need to see how the market develops over the next few months before calling a definitive change in the cycle.

“We expect home insurance premiums to come under upward pressure in the immediate term. The increases are unlikely to be as pronounced as those seen during the last pricing cycle, when exceptional factors including the pandemic, regulatory change and sharply rising inflation had a major impact on insurers’ costs. This time, any increases are more likely to be gradual and targeted.”

Pricing strategies continued to diverge significantly during Q2. Although the average of the five most competitive premiums fell slightly, most of the large providers examined by Defaqto increased their prices over the quarter.

Movements among the principal providers in Q2 ranged from a reduction of -3.1% to an increase of +3%. Whereas over the past year, movements among individual providers have ranged from a reduction of approximately -13% to an increase of +1%, highlighting the increasingly segmented nature of the market.

The contrasting movements show that insurers are responding differently according to their portfolios, growth ambitions and profitability requirements. They also explain how the overall competitive average could continue to fall even as most major providers began to raise prices.

“The headline quarterly figure does not tell the whole story. Most large providers increased prices during Q2, while a smaller number of more substantial reductions were sufficient to keep the competitive market average in negative territory.

“This growing divergence means that pricing is becoming much more dependent on the individual insurer, customer profile and risk. Providers are no longer moving together, and insurers are making increasingly targeted decisions about where they want to compete and where rates need to rise.

“For brokers and customers, that makes shopping around and comparing both price and cover particularly important. As rates begin to increase, we are also likely to see more customers testing the market at renewal, creating greater quote demand but potentially reducing retention for providers that move first or increase prices most sharply.”

Defaqto said the expected move towards higher home insurance premiums could improve insurer margins but would also intensify competition for customers as increasing renewal prices encourage more policyholders to shop around.

The outlook will also depend on claims costs and wider economic and geopolitical pressures. Repair and rebuilding costs remain high, while labour shortages can extend the time and cost involved in settling property claims. Further inflation in construction materials, energy or transport costs could place renewed pressure on home insurers’ pricing.

“The market is entering a more finely balanced phase. Home insurance remains considerably cheaper than it was one or two years ago, having fallen from a relatively high point, but the conditions that supported sustained premium reductions are fading.

“Claims costs remain elevated and external pressures continue to create uncertainty. Developments affecting raw materials, supply chains and the cost and availability of labour could all increase repair and rebuilding costs and would need to be reflected in insurers’ pricing decisions.

“The coming months are likely to be characterised by gradual and highly targeted price increases rather than a sudden market-wide correction. Insurers will need to strike a careful balance between rebuilding margins, remaining competitive and retaining customers in a market where price sensitivity is likely to increase.”