Cracks beneath the surface: The UK Home insurance market
October 1, 2025
We are pleased to launch our highly anticipated 2025 Home Report: Cracks beneath the surface: The UK Home insurance market
- Profitability Pressures and Market Shrinkage: This decade has seen persistently high loss ratios, with Combined Operating Ratios (COR) exceeding 100% since 2020, are primarily driven by rising claims severity, exacerbated by weather volatility. The number of home insurance policies has declined, driven more by falling penetration than by changes in housing stock. Contents insurance penetration among renters dropped from 51% in 2021 to 46% in 2023
- Strategic Growth Opportunities: With limited organic growth, strategic consolidation offers a path to scale and efficiency. Recent transactions, such as Aviva–Direct Line and Ageas–esure, are expected to deliver significant cost synergies. Increasing contents insurance penetration among renters could unlock up to £240 million in additional premium, though this requires tackling affordability and perceived value issues through product redesign and improved claims experiences.
- Pricing and Product Strategy: Premiums have lagged behind inflation, and price competition remains intense. Logically, pricing needs to increase again within the next six months, but this will further reduce the appeal of the product for contents-only policies, particularly where customers do not feel they are getting value from the product.
- Claims Management and Volatility Mitigation: Climate change is increasing the frequency and severity of weather-related claims. Subsidence, driven by soil moisture deficits, is expected to spike in 2025. Strategic use of reinsurance and long-term pricing models is essential to manage the impact of weather-related losses. Continued investment in automation and claims management will be critical in building competitive advantage within the market.
About the authors
Paul De’Ath leads the Oxbow Partners Market Intelligence team. Prior to joining Oxbow Partners Paul spent nine years as an equity research analyst covering all aspects of insurance across the UK and Europe. He started his career as an accountant and also spent some time in industry at Standard Life.
Tony Sault recently joined Oxbow Partners as a Partner with a remit to focus on the Retail Personal and Commercial Lines markets, advising insurer and broker clients on strategy and transformation. Tony started his career over 30 years ago at RSA before moving into consultancy where he spent almost 20 years at EY and Chaired the annual EY UK Motor and Home Results Seminars.