It may be time for clients to get used to the idea of rising premiums once again
For two years, the story in UK home insurance was simple: prices kept falling. That story is starting to change.
New market pricing data from Defaqto shows that the average of the five most competitive quoted premiums for combined buildings and contents cover fell 0.7% over the second quarter of 2026. But the pattern underneath that headline number tells a different story. Prices dropped 0.4% in April. May was sharper, down 1.2%. Then June turned. Premiums rose 1% - the first month-on-month increase Defaqto has recorded since the current downward cycle began.
Premiums are still meaningfully cheaper than they were. Average quoted prices are down 1.3% over six months, 7% below where they sat in June 2025, and 14.4% lower than two years ago. But Defaqto's director Stephen Kennedy says the direction of travel has clearly shifted. "The sustained falls of the past two years have now slowed substantially," he said, adding that insurers are increasingly having to weigh competitive pressure against the need to protect margins.
Most insurers are already raising rates
The overall market average falling doesn't mean most insurers are cutting prices. It's the opposite. Defaqto says the majority of large providers it tracks actually pushed rates up during the quarter. A smaller group, cutting more aggressively, is what's dragging the headline figure down.
Individual insurer movements over Q2 ranged from a 3.1% reduction to a 3% increase. Over 12 months, the spread is wider still: falls of around 13% at one end, a rise of roughly 1% at the other, depending on the provider. Insurers simply aren't moving together the way they used to.
Francis Luery, product manager at Defaqto, said: "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." He expects that divergence to widen further, with insurers making sharper, more individual calls on where they want to grow and where they need to reprice.
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The ABI's numbers point the same way
Defaqto isn't the only one seeing this. The Association of British Insurers runs its own Property Insurance Tracker, built on a different methodology, and it recorded the average combined buildings-and-contents premium at £383 in Q2 2026 - the ABI's first quarterly rise since early 2025, even though the figure remained around 2% below where it stood a year earlier.
Kennedy is careful not to overstate what comes next. "We expect home insurance premiums to come under upward pressure in the immediate term," he said, but he doesn't think it will look like the last hard market. The increases that hit the sector during the pandemic-and-inflation-driven cycle were sharp and broad-based; this time, he expects the correction to be "more gradual and targeted."
Defaqto has also pointed to a pattern from its wider pricing series: home insurance has historically tended to lag motor pricing by several months, in both directions. Its own motor index has already turned higher, rising for a second consecutive quarter. If that lag holds, June's home insurance move may be the early edge of something bigger through the rest of the year.
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Claims costs are still the bigger pressure
Rebuild and repair costs remain elevated. Labour shortages are still dragging out claims timelines. Any further rise in construction materials, energy or transport costs would add to the pressure insurers face to reprice. It's the same tension that has defined the property market for the past year - record claims sitting alongside a market that, until now, kept cutting prices.
Kennedy said: "Claims costs remain elevated and external pressures continue to create uncertainty… The coming months are likely to be characterised by gradual and highly targeted price increases rather than a sudden market-wide correction."
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What it means for brokers
Pricing is becoming a much more individual, insurer-by-insurer exercise than a market-wide trend that can be summed up in one number. Luery expects more customers to shop around at renewal as they notice prices creeping up, which cuts both ways: more quote volume for brokers, but a bigger retention challenge for any insurer that moves first or prices too sharply.
Defaqto's release doesn't break the figures down by property type or flood risk. But given how tightly those categories have already been priced over the past two years, clients with flood-exposed postcodes, older or higher rebuild-cost properties, or areas with subsidence risk may be among the first to see insurers reprice. It's worth asking those clients' insurers directly about renewal trajectory rather than assuming the market average applies evenly across the book.
The next couple of quarters should show whether June was a one-off or the start of something more sustained.
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Figures are drawn from Defaqto's Market Pricing data, which tracks the average of the five most competitive quoted premiums for combined buildings and contents insurance.
