This blog provides insight into the current state of the UK property insurance market, offering context for clients on what to expect for their 2026 renewal.
The Current State of the Market & Outlook for 2026
The softening trend from 2025 looks set to continue through 2026 — well-managed risks can expect rate reductions, insurers reducing excesses and softening flood terms. With new market entrants, prudent placement decisions matter more than ever; a cheap price from a newly-formed MGA with offshore capacity might not serve long-term interests.
Emerging risks tempering the outlook:
- Profitability Pressure: S&P forecasts UK P&C profitability may drop slightly in 2026 as claims inflation continues
- Volatility Drivers: geopolitical tensions and unpredictable weather (record subsidence claims in early 2025)
- Cyber Integration: cyber insurance becoming standard in property renewals, UK market projected to double by 2030
Indexation Rates and Valuations
Indexation rates remain steady around 3-4%. Regular reinstatement valuations recommended every 3 years. A recent Rebuild Cost Assessment report (43,000 property assessments) found 93% of properties insured for the wrong amount — 70% underinsured, 23% overinsured. Most Property Owners policies have an "Average" clause, meaning claim settlements can be proportionally reduced by the percentage of underinsurance.
Other Market Themes
Insurers closely watching lithium batteries, e-scooters and battery storage risk. EV charging points (especially in basement car parks) require robust risk assessment. Insurers keen to understand how property owners manage escape-of-water exposure, particularly in blocks of flats.
Conclusion
The soft cycle is expected to continue through 2026 as insurers compete for business — good-performing risks should expect favourable terms, but keep one eye on the long term.