How UK Home Insurers Can Return to Profit

By Karsten Ries, CEO, ONICS

Since 2019, the UK home insurance sector has faced sustained profitability challenges. Escalating claims severity, an ageing housing base, rising repair and materials costs, and aggressive price competition have all combined to compress margins. Increasingly, losses appear structural rather than cyclical.

Meanwhile, insurers across the Nordic region have demonstrated that strong profitability is still achievable. Markets in Denmark, Sweden, and Norway have pivoted away from purely reactive claims payment models toward preventative, data-driven risk management strategies. The outcomes include lower loss ratios, sharper underwriting insight, and stronger customer relationships.

For UK insurers aiming to rebuild profitability, after six years of losses, the Nordic experience offers several practical lessons.

1. Prevention creates value 

The UK home insurance market remains highly price sensitive. Policies often look similar to customers, switching providers is straightforward, and engagement is typically limited. This environment drives churn and pushes insurers into unsustainable price competition.

Nordic insurers have reframed the proposition by embedding prevention directly into their offerings. Through connected-home technologies, including leak detection sensors, temperature and humidity monitoring, and smart smoke detection, insurers intervene early to prevent losses before they escalate.

Escape of water claims account for roughly a quarter to a third of home insurance losses. Evidence from Nordic deployments suggests early detection can completely prevent around 10% of these incidents and significantly reduce the severity of many others. The financial impact is substantial, particularly given how costly and frequent these claims are.

For UK insurers, prevention represents a shift from competing on price to competing on protection, providing customers with visible, everyday value.

1. High-quality data matters 

While AI is a hot topic that is widely discussed across underwriting and claims, its effectiveness depends entirely on data quality. In the UK, underwriting still relies heavily on static proxy data such as postcode, property type, historical claims, and broad demographic factors. These inputs rarely reflect how risk changes in real time.

Nordic insurers are closing this gap by collecting structured, real-time data directly from insured properties via connected devices. This enables continuous visibility into environmental conditions, usage patterns, and early indicators of potential loss events.

The benefits extend across the insurance value chain. Insurers can price risk more accurately, intervene earlier to reduce loss severity, validate claims more efficiently, and identify potential fraud more easily. The core insight is clear: improving cdata quality often delivers more value than simply improving modelling sophistication.

1. Ongoing engagement delivers loyalty and growth

Low customer engagement remains a major issue in UK home insurance. Many customers interact with their insurer only once a year or when something goes wrong. This weakens loyalty, increases churn risk, and limits cross-selling opportunities. Many UK customers can’t even name their current insurer!

Nordic insurers using connected-home platforms have created regular, positive interactions through alerts, insights, and preventative guidance delivered via mobile apps. This reframes the insurer as an active partner in protecting the home rather than a distant claims payer.

Even small improvements in retention can create meaningful financial gains. With If Insurance, the biggest insurer in the Nordic region, for instance, this went way beyond initial expectations or goals. Prevention services can also support premium product tiers, encouraging customers to pay more in exchange for enhanced protection.

Beyond retention, connected platforms create opportunities for new services, including smart-home automation and expanded safety and security solutions.

1. Technology alone is not enough 

The strongest Nordic results did not come from deploying devices alone. Success depended on integrating prevention technology into a coherent operating model, including:

• Clear customer onboarding and education
• Reliable alert triage processes
• Partner ecosystems capable of responding quickly to incidents

This combination ensures operational accountability while building customer trust in the prevention proposition.

1. Redefining the insurer’s role

The Nordic experience shows that restoring profitability is not simply about cost reduction or premium increases. It requires redefining the insurer’s role, from compensating loss after the event to actively helping prevent it. It changes the whole dynamic with the customer, from negative to positive.

Prevention-driven models reduce claims costs, improve underwriting accuracy, and create meaningful differentiation in commoditised markets. Once customers adopt embedded prevention services, switching providers becomes much less attractive, greatly strengthening retention and long-term value.

The way ahead

For UK home insurers facing sustained margin pressure, prevention-led models are moving from optional innovation to proven strategy. 

The most sustainable path back to profitability may not come from pricing harder, but from protecting smarter by becoming a long-term partner in managing risk, not just paying claims after the event.

For more information: www.onics.com/insurtech

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