Home insurance premiums continued to fall during the second quarter of 2026, but the pace of reductions slowed sharply as prices rose in June and most major insurers increased rates, according to new data from Defaqto.

Defaqto’s latest Market Pricing data shows that the average of the five most competitive quoted premiums for combined buildings and contents insurance fell by 0.7% during the quarter. Prices declined by 0.4% in April and 1.2% in May before increasing by 1% in June.

The June increase marks the first meaningful monthly rise recorded by Defaqto after an extended period of falling home insurance premiums. While the firm said it is too early to conclude that the market has entered a sustained period of price increases, it believes the latest figures could signal that the recent cycle of premium reductions is drawing to a close.

Average quoted premiums have fallen by 1.3% over the past six months and remain 7% lower than in June 2025, while prices are 14.4% below their level two years ago. However, Defaqto said the pace of reductions has eased significantly compared with the declines seen over the previous two years.

Stephen Kennedy, director at Defaqto, said: “Home insurance pricing reached an important turning point during the second quarter. The overall market recorded another modest reduction, but the 1% rise in June and the increases introduced by most large providers indicate that the direction of travel is changing.

“The sustained falls of the past two years have now slowed substantially. Competitive pressure remains strong, but insurers are increasingly having to balance that competition against the need to maintain sustainable margins and reflect the underlying cost of providing cover.”

“Historically, movements in home insurance pricing have tended to lag behind motor by several months, both when prices rise and when they fall. If that pattern holds, June could be the beginning of further upward movement, although we will need to see how the market develops over the next few months before calling a definitive change in the cycle.

“We expect home insurance premiums to come under upward pressure in the immediate term. The increases are unlikely to be as pronounced as those seen during the last pricing cycle, when exceptional factors including the pandemic, regulatory change and sharply rising inflation had a major impact on insurers’ costs. This time, any increases are more likely to be gradual and targeted.”

MOST LARGE PROVIDERS RAISE PRICES

Despite the overall quarterly decline, Defaqto said most of the major insurers it tracks increased prices during the period.

Price movements among the principal providers ranged from a 3.1% reduction to a 3% increase during the second quarter. Over the past 12 months, individual provider movements have ranged from falls of around 13% to increases of 1%, underlining the increasingly varied pricing strategies being adopted across the market.

Defaqto said the divergence reflects differences in insurers’ portfolio mix, growth objectives and profitability requirements. It also explains how the overall competitive average continued to edge lower despite most major providers increasing their prices.

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.

“This growing divergence means that pricing is becoming much more dependent on the individual insurer, customer profile and risk. Providers are no longer moving together, and insurers are making increasingly targeted decisions about where they want to compete and where rates need to rise.

“For brokers and customers, that makes shopping around and comparing both price and cover particularly important. As rates begin to increase, we are also likely to see more customers testing the market at renewal, creating greater quote demand but potentially reducing retention for providers that move first or increase prices most sharply.”

Defaqto said a gradual return to higher home insurance premiums could support insurer margins but may also intensify competition as rising renewal prices encourage more policyholders to compare providers.

The firm added that future pricing will also depend on claims costs and wider economic conditions. Repair and rebuilding costs remain elevated, while labour shortages continue to affect both the cost and timescales of property claims. Further increases in construction material, energy or transport costs could add further pressure to insurers’ pricing.

Kennedy added: “The market is entering a more finely balanced phase. Home insurance remains considerably cheaper than it was one or two years ago, having fallen from a relatively high point, but the conditions that supported sustained premium reductions are fading.

“Claims costs remain elevated and external pressures continue to create uncertainty. Developments affecting raw materials, supply chains and the cost and availability of labour could all increase repair and rebuilding costs and would need to be reflected in insurers’ pricing decisions.

“The coming months are likely to be characterised by gradual and highly targeted price increases rather than a sudden market-wide correction. Insurers will need to strike a careful balance between rebuilding margins, remaining competitive and retaining customers in a market where price sensitivity is likely to increase.”