The average cost of home insurance in the UK fell 9% year on year in January 2026, according to Compare the Market – a sharp discount for households that arrives just as the industry confronts record claims costs, raising questions over how long insurance premiums can keep dropping.
Data from Compare the Market showed most regions recorded lower prices compared to January 2025, with Greater London posting the steepest decline at 13%, followed by Scotland at 11%.
East Anglia and the South East both saw 10% falls. Northern Ireland bucked the trend as the only region where insurance premiums rose, climbing 6% to £483 - the highest of any region.
The cheapest areas were the North East (£157), East of England (£161), and West Midlands (£174). Elsewhere, the East Midlands fell from £196 to £180, the North West from £189 to £176, Wales from £202 to £187, and the South West from £203 to £188.
Sam Wilson, an expert at Compare the Market, said the decline would offer relief after a period of rising costs, though he cautioned that regional differences "remain pronounced."
The softening has less to do with improving risk than with insurers fighting over a shrinking pool of customers. Consumer Intelligence research, published in late 2025, found just 68.6% of home insurance customers shopped around in the first three quarters of the year, down from 77.8% in 2024.
That squeeze is visible in pricing. Consumer Intelligence data from January 2026 indicated more than two-thirds of the most competitive insurers had cut quoted premiums for combined buildings and contents policies in the previous three months.
Deloitte partner Cherry Chan had noted in December 2025 that while "claims inflation has remained persistent," claims frequency was down because customers are "spending more time at home post-pandemic and spotting potential issues earlier."
Yet Deloitte forecast home insurers swinging to a loss in 2026, with the net combined ratio expected to reach 102.1%.
The pricing pressure sits uneasily alongside the ABI's finding that UK insurers paid out £6.1 billion in property claims in 2025 – a record.
Storm damage to homes rose 32% to £244 million, domestic flood claims jumped 38% to £312 million, and subsidence payouts hit £307 million after the UK's hottest summer.
ABI director of general insurance policy Chris Bose warned that "increasingly severe weather is taking" a growing toll on homes and businesses.
Chan's Deloitte team projected insurance premiums falling a further 7% in 2026. For now, households benefit from cheaper home insurance – but with insurers expected to pay out more than they earn, the relief may not last.
