UK Home Insurance Market Shifts: Severity Modelling Takes Centre Stage

Alice Roden

4 hours ago

UK Home Insurance Market Shifts: Severity Modelling Takes Centre Stage | Verisk

A Changing UK Home Insurance Market Puts Severity in the Spotlight

By Jack Leathers

19 February 2026 / 2 min read

With premiums surging 25% year-on-year, the old playbook for pricing risk is no longer enough. Understanding the frequency of perils has been—and remains—a critical factor. But inflation in recent years has contributed to 25% year-on-year increases in premiums for buildings coverage, according to the Go.Compare. Rising costs and a shifting risk environment are bringing severity to the fore as a pricing consideration.

flood in europe

Frequency models coupled with inflation assumptions may have sufficed in the past. But extreme weather events are increasing. For example, recent research suggests that wind gusts called “sting jets”, embedded within extratropical cyclones, are likely to become more prevalent due to climate change.¹ And while windstorm frequency is projected to decrease in many areas, intensity is projected to increase over Western, Central, and Eastern Europe.²

Meanwhile, since the pandemic, rebuilding costs have often outpaced even an elevated general inflation rate, rising 37% from January 2020 to January 2025.³ It’s becoming increasingly important to recognise the value of severity models alongside claims frequency to accurately model claims costs.

With the imperative for stand-alone severity modelling comes a need for nuanced data to capture differentials across the UK:

Accurate reinstatement costs incorporating regional variations in rebuild costs, spanning materials and labour
Address-level property attributes such as premise type, age, size, the presence of a basement, and levels of insulation
Regional variations in weather patterns together with local topography
Local demographic data

Verisk is responding to the need with new severity models for two key perils: escape of water and storm. These models draw from an ecosystem of reliable sources, including Verisk’s property claims platform, our Residential Rebuild calculator, and the trusted Verisk data solution, UKBuildings.

Applying the latest machine learning techniques to the data, the models assign scores down to the postcode level, indicating the relative severity of repair costs for the specified perils. Combined with Verisk’s well-established frequency models, these new solutions can enhance the precision of home insurance pricing and help carriers compete profitably in a market transformed by economic and climate forces.

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Colin Manning, Elizabeth J. Kendon, Hayley J. Fowler, and Nigel M. Roberts, “Projected increase in windstorm severity and contribution from sting jets over the UK and Ireland,” Weather and Climate Extremes, published June 2023, accessed November 6, 2025, https://www.sciencedirect.com/science/article/pii/S2212094723000154.
Inovasita Alifdini, Julia Moemken, Alexandre M. Ramos, and Joaquim G. Pinto, “Future Changes of European Windstorm Losses in EUROCORDEX Simulations,” Tellus A: Dynamic Meteorology and Oceanography, published March 19, 2025, accessed November 6, 2025, https://www.researchgate.net/publication/390007570_Future_Changes_of_European_Windstorm_Losses_in_EURO-CORDEX_Simulations.
“Building Material Prices: 0.2% Fall in Jan 2025,” Cladco Profiles, published April 29, 2025, accessed November 6, 2025, https://www.cladco.co.uk/blog/post/building-material-prices.

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Alice Roden

Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.