UK home insurers facing prolonged margin pressure are being encouraged to look to Nordic markets for strategies to return to profitability, according to industry experts.

For six consecutive years, the UK home insurance sector has struggled to make money, with rising claims severity, ageing housing stock, inflationary repair costs, and intense price competition squeezing margins. Analysts at EY have described these losses as structural rather than cyclical.

In contrast, insurers in Denmark, Sweden, and Norway have successfully shifted from reactive claims management to preventive, data-led risk management, resulting in lower losses, improved underwriting insight, and stronger customer loyalty.

Key lessons from the Nordics include:

Prevention over price
Nordic insurers embed preventative tools such as water-leak sensors, temperature and humidity monitors, and connected smoke detection into policies. Early detection of issues such as escape-of-water claims, which account for 25-30% of UK home insurance losses, can prevent approximately 10% of claims and reduce the severity of a further 30% by half. For UK insurers, offering preventive solutions provides a competitive alternative to competing solely on premium.

Data-driven underwriting
Nordic insurers use Internet of Things (IoT) data to create real-time, high-quality risk profiles for each home, enabling more accurate pricing, proactive claims intervention, and reduced operational costs. Experts say UK insurers that invest in data quality stand to gain more from AI-driven underwriting than from algorithm sophistication alone.

Customer engagement drives loyalty and revenue
Connected-home platforms allow insurers to interact with customers frequently, delivering alerts and guidance that position the insurer as a partner in home protection. Even modest improvements in policyholder retention can generate substantial additional value, while tiered pricing strategies and preventive services can unlock new revenue streams.

Industry analysts note that successful Nordic outcomes rely not only on technology, but also on fit-for-purpose operating models that ensure alerts are acted on quickly and consistently, creating clear ownership internally and trust externally.

For UK insurers, IoT-enabled prevention is increasingly viewed as a proven lever to reduce claims, strengthen underwriting insight, and differentiate in a highly commoditized market. Experts say the path back to sustainable profitability lies in protecting smarter, rather than simply increasing premiums, positioning insurers as long-term partners in risk management.