UK insurance premium income forecast for steady but slowing growth

Non-life insurance premium income to return to ‘normal’ growth levels

As the housing market opens up and UK households benefit from real income gains during the last year, 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. As a result, income from non-life insurance premium growth is forecast to grow 5.2% in 2025 (down from 8.4% in 2024) 4.3% in 2026 and 3.6% in 2027.

Life insurance demand supported by consumer sentiment and workforce growth

Consumer demand for life insurance policies remains stable, and alongside the growing UK workforce – which will increase the number of workplace pensions – the uptake of policies is expected to increase this year. However, the EY ITEM Club warns that an expected slowdown in the growth of household disposable income in the year ahead may affect overall growth levels in the life insurance sector. As a result, income from life insurance premiums is forecast to grow 4.4% in 2025 (down from 5.8% in 2024), 3.3% in 2026 and 3.7% in 2027.

Martina Neary, EY UK Insurance Leader, comments: “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.

“That said, ongoing geopolitical uncertainty and unpredictable weather patterns pose potential risks to the growth outlook. 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.”

Section 3: Notes to editors:

About the EY ITEM Club

The ITEM Club is the only non-governmental economic forecasting group to use the HM Treasury’s model of the UK economy. Its forecasts are independent of any political, economic or business bias and this independence is underpinned by the untied sponsorship of Ernst & Young LLP.

ITEM stands for Independent Treasury Economic Model. HM Treasury uses the UK Treasury model for its UK policy analysis and Industry Act forecasts for the Budget. ITEM’s use of the model enables it to explore the implications and unpublished assumptions behind Government forecasts and policy measures. Uniquely, ITEM can test whether Government claims are consistent and can assess which forecasts are credible and which are not.

EY Economics provides knowledge, analysis and insight: helping businesses understand the economic environments in which they operate, both in the UK and globally.