Growth in life and non-life insurance premiums is projected to decelerate in 2026 amid a slowing UK economy and softening household incomes, according to a new EY ITEM Club report.
UK Life insurance premiums, meanwhile, are projected to follow a similar trajectory, decelerating from 4.5% in 2025 to 3.0% in 2026.
EY said demand will be dampened by strained household budgets and a softening labour market, though lower savings rates may offer some support.
“While employment growth will slow, the number of individuals with workplace pensions is still expected to rise, and overall, a modest recovery of 3.4% is expected in 2027 and 2028,” EY explained.
Martina Neary, EY UK & Ireland Insurance Leader, commented: “Performance across the UK insurance industry has been strong recently, particularly in commercial lines of business where robust competition has driven down prices, improving the attractiveness to buyers.
“However, with momentum in the UK economy slowing and household incomes softening, premium growth across life and non-life insurance is expected to decelerate next year.”
Neary continued, “The industry will also be facing continuing challenges over claims performance – relating to claims inflation, complexity and ongoing supply chain issues and skills shortages – as well as uncertainty around the upcoming Budget, global relations and future weather patterns.
“As a result, it will be more important than ever for UK insurers to remain focused on their growth strategies.
“Many insurers are already transforming their business operations and customer experiences for the better, harnessing AI and technology solutions, and demonstrating strong innovation agendas.
“Continuing to take these forward will be crucial to navigate challenges and respond to opportunities, so businesses can support customers with more personalised products and faster claims support, to ultimately drive sustainable growth.”
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