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UK Insurance Market Update: Current Trends and Key Issues

As we continue through a period of uncertainty and change, we wanted to provide an update on the latest insurance market trends and issues impacting both commercial insurance and personal lines in the UK market. As your trusted community broker, we aim to keep you informed and ready to navigate the evolving landscape of insurance.

For the first time since 2020, UK market ratings decreased in the second and third quarters. With insurers targeting significant growth for 2025, we can expect more competition and a greater focus on retaining business, leading (we hope) to more stable pricing

Long-term agreements with fixed or lower rates could replace the rate hikes seen in recent years. However, insurers will still prioritise businesses able to demonstrate strong risk management

Commercial Insurance Trends

Rising Premiums: One of the most notable insurance trends across the commercial insurance market is the continued rise in premiums. This is primarily due to the increasing frequency and severity of natural disasters, such as storm Eowyn, as well as the economic aftershocks caused by global conflicts and the pandemic. For businesses, this means that insurance costs are will most likely continue to rise, especially for property. Furthermore, Liability premiums and Professional Indemnity premiums are becoming more competitive due to changes in the Ogden Discount Rate, (also known as the Personal Injury Discount Rate). The Ogden Discount Rate is a percentage used to calculate the lump sum compensation awarded to individuals who have suffered life-changing injuries, ensuring they receive a fair amount that reflects future financial losses and care costs. It accounts for the interest they could earn if they invest the payout, aiming to prevent over- or under-compensation. The lower the rate the higher the settlement of a claim is likely to be. As of January 11, 2025, the current Ogden rate in the UK is +0.5%. liability, and professional indemnity coverage. It’s vital for businesses to review their policies regularly and ensure they are getting the right level of cover for their specific needs.
Business Interruption Coverage: The COVID-19 pandemic has raised awareness about the importance of business interruption insurance, particularly for SMEs. Many businesses were caught off guard when lockdowns and restrictions led to prolonged shutdowns. As a result, we’re seeing greater demand for policies that protect against not just physical damage but also income disruption from unforeseen events. However, insurers are tightening terms around this coverage, so it’s essential for businesses to be proactive in reviewing their policy wordings to avoid gaps.
Cybersecurity Risks: Cyber risk and data breaches continue to be a top concern, with increasing incidents of data breaches, ransomware attacks, and system disruptions, driven by AI developments. As cyber threats evolve, so does the need for comprehensive cyber liability coverage. Businesses that rely heavily on digital platforms and data processing must ensure they have robust protection against data theft and hacking attempts. Cyber insurance is no longer just an add-on, but a crucial component of a business’s risk management strategy. Cyber insurance has seen existing and new insurers adding capacity to the market. This has led to more competition, better pricing, and wider coverage, with some insurers shifting from aggregate to any one claim basis. While clients will benefit in 2025, it will be interesting to see how sustainable this trend is.
Sustainability and ESG Concerns: With growing emphasis on environmental, social, and governance (ESG) factors, there is an increasing shift in how insurers assess risks. Businesses that demonstrate strong ESG practices may benefit from more favourable premiums, while those with poor sustainability records might face higher costs or challenges obtaining coverage. This is a trend that is expected to intensify in the coming years, so it’s important to be proactive in aligning with sustainability goals.
Property: Residential blocks remain a challenge for insurers, particularly regarding construction and water damage risks. While inflation is slowing, reducing the need for heavy property indexation, concerns remain about whether property values are adequately insured. Reports from 2024 highlighted that 46% of commercial properties in the UK are underinsured³. We continue to recommend a property valuation every three years to ensure proper coverage for both residential and commercial properties.

Jon Walker, CEO of AXA Commercial recently said that “Risks are becoming increasingly interconnected, and insurance plays a crucial role in protecting what matters to people most”.

Motor Fleet Trends

The motor insurance market continues to harden, impacting both the consumer and fleet sectors. After a period of reduced accident frequency during 2021 and 2022, claims have risen as road usage increased post-pandemic. Several factors have contributed to this shift:

Vehicle Value Increases: The average price of second-hand cars rose by 28% between April 2021 and June 2022, driving up insurance premiums.
Rising Repair Costs: Advancements in technology have led to higher repair costs and longer repair times.
Increased Theft Rates: Vehicle theft payouts rose 53% in 2023, highlighting the growing risk.
Supply Chain Issues: The pandemic and war in Ukraine have disrupted parts supply, pushing repair costs higher.
Whiplash Reform Impact: Personal injury claims related to stress, and mental health have increased, particularly in transport and storage sectors.
EVs: Electric vehicles have higher repair costs and are more likely to be written off in accidents.

As market conditions remain challenging, it’s essential for businesses to focus on risk management, to further improve performance. Early claim reporting, driver training, and telematics can help reduce costs. That’s why our local and knowledgeable broking team work closely with clients, offering detailed submissions and risk management strategies to navigate this difficult market.

It’s a good time to review your policy and shop around for competitive quotes, especially as new vehicles are added to your fleet.

Personal Lines Insurance Trends

The Association of British Insurers (ABI) suggest that from Jan to Sept 2024, around £4.1 billion in claims were seen.

Home Insurance and Climate Change: Natural disasters and extreme weather events such as storm Eowyn, which hit the UK and Ireland at the end of January 2025, have become more frequent and severe, impacting the cost of home insurance. Current estimates put claims resulting from this last storm at over £500m. As a result, premiums have increased, with the average price of Buildings and Contents insurance rising by 3% in the third quarter¹. From flooding to storm damage, homeowners are facing higher premiums and, in some cases, reduced coverage availability. It’s not just weather events affecting the market—subsidence claims also increased in the second quarter of 2024, surpassing £60 million². We advise homeowners to check their policies closely, especially around coverage limits for water damage or weather-related events. If you live in an area prone to flooding or other natural events, consider additional coverage to ensure adequate protection.
Rising Motor Insurance Costs: In the personal motor insurance market, premiums have been steadily rising during 2024, driven by factors like inflation, higher repair costs, and an increase in the number of claims related to accidents. In addition, the ongoing transition to electric vehicles (EVs) has led to changes in pricing structures. EVs tend to be more expensive to repair, and some insurers are adjusting their rates accordingly. However, in the last few months we have seen some positive news for private car insurance, as the average motor insurance premium fell by 2% from April to June, compared to the first quarter of 2024, but remain 9% higher than the same period last year, according to the latest data from the Association of British Insurers (ABI)³. However, repair costs remain high, and while the cost of vehicle theft decreased, the cost of theft from vehicles increased.
Underinsurance Risk: Both personal and commercial lines are increasingly affected by underinsurance, a growing issue where the level of coverage is insufficient to meet potential losses. This is particularly evident in home and contents policies, where many households are not adequately insured to cover the full cost of rebuilding or replacing possessions in the event of a catastrophe. RebuildCostASSESSMENT.com’s latest annual infographic has revealed that 76% of UK buildings are underinsured⁴. Furthermore, millions of households across the UK are underinsured for their contents insurance.⁵ It’s crucial to regularly assess the value of your assets and adjust your cover as needed to avoid being underinsured.
Health and Wellbeing Insurance: The pandemic underscored the importance of health and wellbeing, prompting many to reassess their personal health insurance needs. More people are seeking private health cover and critical illness protection to complement the NHS, especially for faster access to treatment and peace of mind during uncertain times. The current waiting list is around 7.48 million cases⁶, with an average wait time of nearly 15 weeks according to the BMA⁶. If you don’t currently have a health policy in place, it’s worth considering, particularly given the rising costs of healthcare.

What You Can Do

Recent natural disasters, pandemics, global conflicts, and widespread underinsurance have underscored the urgent need for reliable insurance coverage. These events serve as a stark reminder of how unpredictable the world can be, highlighting the critical importance of having strong financial protection to face unexpected challenges.

In these uncertain times, staying ahead of insurance market trends and ensuring that your policies align with your evolving needs is more important than ever. As your community broker, we are here to help you review your coverage, explore new options, and make sure you are fully protected against the risks that matter most.

If you have any questions or would like to discuss your insurance needs, don’t hesitate to get in touch. We’re committed to guiding you through these changes and offering personalised advice that keeps your business and personal assets secure.