From a shopper perspective, costs eased. In motor, the ABI reported that the typical worth truly paid fell for 3 consecutive quarters via 2025, reaching £551 in Q3. On the aggressive finish of the market, our personal information exhibits simply how intense competitors grew to become: new enterprise costs within the high 5 worth positions on worth comparability websites fell between January and November, by round 3.5% in motor and greater than 11% in house.
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. Buying volumes had been down materially in contrast with the peaks seen in 2024, shrinking the pool of latest enterprise obtainable.
Shopper Intelligence information exhibits this clearly. Within the the primary three quarters of 2025, 68.6% of house 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 energetic consumers meant insurers had been competing more durable for a shrinking pool of latest enterprise.
On the similar 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 compelled insurers to compete more durable on worth, regardless of already skinny margins.
Crucially, this performed out towards a backdrop of persistent and extreme claims value strain, which didn’t ease as costs fell. In motor, restore prices continued to rise as automobiles grew to become extra complicated, components 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 moderately than insurer income, and highlighting the necessity for better claims effectivity moderately than additional worth intervention.
In house insurance coverage, claims volatility was much more seen. Insurers paid out a document £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 now not an outlier, and sizzling, dry summers adopted by heavy rainfall enhance dangers reminiscent of 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 atmosphere, 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 moderately 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 comparatively calm.
In motor, the broad market consensus is that premiums rise once more, by round 3% on common, after easing via 2025.
In house, the route is much less about costs rising sharply and extra about them not falling additional. Rebuild value inflation has slowed, and reinsurance circumstances have been much less hostile, however current climate losses make sustained declines troublesome to justify.
Put merely, throughout each markets; common premiums are prone to edge up solely barely.
However that calm is deceptive.
Claims prices stay structurally excessive; climate danger is turning into extra frequent moderately than distinctive, and insurers are taking totally different strategic positions on development, margin and danger. The result’s continued variation in what particular person prospects see at renewal, by postcode, automobile, property kind and insurer urge for food.
And that variation, not the headline common, is what drives behaviour.
Why behaviour follows renewals, not market averages
Customers don’t reply to what “the market” is doing. They reply to their very own renewal.
Switching ranges throughout each house and motor are already low by historic requirements, reflecting pricing reforms, diminished financial savings from purchasing round, and a better give attention to service and claims expertise.
Shopper Intelligence information exhibits that 35% of each motor and residential policyholders switched insurer within the the first three quarters of 2025, reinforcing simply how muted churn has turn out to be throughout each markets. This low‑switching place to begin issues.
The place renewals are secure, prospects are far much less inclined to interact. The place renewals transfer sharply, purchasing returns rapidly, even when the typical premium barely adjustments.
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 purchasing and switching general.
By Q3 2025, the proportion of drivers receiving a renewal enhance 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 adjustments, and people had been the shoppers almost definitely to buy.
The identical dynamic applies in house insurance coverage, with a special set off. Pricing reforms diminished the standard loyalty penalty, dampening price-led switching. However claims expertise, notably following climate occasions, stays a robust catalyst. In a low-switching market, a poor claims consequence can immediate prospects to maneuver even when worth variations are comparatively small.
Throughout each markets, the behaviour is constant:
- Secure renewal → low engagement
- Sharp renewal motion → quick purchasing
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 moderately than theoretical.
Progress turns into much less about headline charge adjustments and extra about share motion. When the market solely strikes just a few per cent general, who wins and loses prospects issues greater than market dimension development.
Anticipate continued dispersion by model and quick rotation on comparability websites. Completely different insurers will make totally different trade-offs between development and margin, producing speedy winner-and-loser cycles in particular segments moderately than a single, tidy market development.
Underwriting self-discipline turns into extra focused. In house insurance coverage, which means sharper differentiation by postcode and danger, alongside extra emphasis on prevention and resilience. In motor, it means a fair stronger give attention to claims management, together with restore pathways, fraud detection and automation, not as a know-how story, however as a value and buyer outcomes story below ongoing regulatory scrutiny.
Comparatively secure pricing opens the door to propositions past single-product worth. With churn decrease and acquisition prices excessive, insurers are prone to push more durable on multi-product relationships, notably house and motor collectively, competing on worth, service and ease moderately than worth alone.
Ultimate thought: why Shopper Intelligence issues in 2026
In a 12 months like 2026, technique doesn’t succeed or fail on the typical 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 individual model’s efficiency?
That’s the place Shopper 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 transferring by phase and postcode, who’s profitable and dropping on the comparability websites, and what’s actually driving purchasing and switching. That visibility permits insurers to behave early, adjusting pricing, propositions or technique, moderately than reacting after share has already moved.
In a market that appears calm on the floor however noisy beneath, context is just not a nice-to-have. It’s the distinction between reacting late and competing properly.