UK home insurance industry will lose money on underwriting this year, paying out £1.03 in claims and expenses for every £1 received in premiums, consultancy EY predicts. The squeeze comes from supply chain disruptions, rising fuel costs, and lower premiums, despite some insurers potentially remaining profitable through investment returns.

Total payouts by UK insurers have more than doubled since 2020, rising 126 per cent due to higher materials, labor and repair costs. Average home insurance premiums are expected to fall 3% by year-end, making an average policy £10 cheaper at £320, as energy prices surge amid the war in Iran and economists raise inflation expectations.

Climate change continues to impact insurers, with subsidence claims jumping 85 per cent after the 2025 dry summer. Storm and flood claims remain muted at 18% below the 10-year average, providing some relief. Dan Beard of EY noted forecasting challenges remain amid geopolitical uncertainty over how long the conflict will continue to affect prices.