Insurance premium income forecast for steady growth over next three years

UK insurers are expected to report steady growth in premium income over the next three years, according to the latest EY Item Club Outlook for Financial Services report.

Published today (17 February 2025), the data showed that UK non-life premium income is forecast to grow 5.2% in 2025, 4.3% in 2026 and 3.6% in 2027.

It comes following a period of sharp premium increases driven by cost pressures over the past two years. EY said premium growth is expected to stabilise as interest rates continue to fall and costs ease.

Martina Neary, EY UK insurance leader, said: “The UK’s economic recovery is encouraging for both UK insurers and their customers and the insurance sector is set for steady growth over the coming years.

“Falling interest rates and stabilising inflation will play a crucial role in easing consumer caution and driving demand for both general and life insurance products in the year ahead, and while premium growth is expected to be moderate this year, the market remains resilient.”

Warning

EY also said that as UK households benefit from income gains, demand for non-life products such as home and motor insurance is expected to rise.

“At the same time, supply chain issues that had led to high replacement part costs for goods such as washing machines or car replacement parts have eased, meaning firms are now more able to lower the rate at which premiums are raised,” EY added.

However, Neary warned that ongoing geopolitical uncertainty and unpredictable weather patterns pose potential risks to the growth outlook.

She added: “As ever, UK insurers will need to continue to strike a careful balance between managing costs, making strategic adjustments in line with market changes, supporting their customers – particularly the most vulnerable – and exploring new avenues for sustainable growth and innovation.”