The latest data from the ABI's quarterly premium tracker shows
that the average cost of motor insurance has fallen by £60 over
the past year.1 For the period April to June
2025, the average premium was £562 - down from £622 in the same
quarter of 2024. When adjusted for inflation, the real-terms
decrease is even more pronounced, amounting to an £81 drop
year-on-year.2
Premiums also fell by £19 (3%) compared to the first quarter of
the year. This marks the second consecutive quarterly decline,
following a £40 (6%) drop in Q1 2025.
While premiums have fallen from their peak, the industry's
efforts to tackle the cost of insurance through its 10-Point
Roadmap continues as claims pressures
persist. 3
ABI members paid out £3.1 billion in car insurance claims during
the second quarter of the
year,4 maintaining the record-breaking
level of quarterly payouts first reached in
Q1.5
Repairs continue to be a major contributor to elevated claims
costs - increasing by £100 million from Q1 to £2.1
billion.
Rising repair costs stem from a range of pressures. The
increasing sophistication of today's vehicles - featuring complex
electronics, advanced sensors, and integrated systems - has made
repairs more intricate and time-consuming. Broader economic
inflation continues to impact the price of parts, materials, and
operational overheads. Compounding the issue is a shortage of
skilled technicians, which slows repair times - further inflating
costs.
The high cost of claims for theft also played a role in the
record payouts, as the average claim for theft of and from a
vehicle increased by £319 (3%) on the previous quarter to
£11.8k.
Throughout the quarter, insurers settled 669,000 claims - 5% more
than 639,000 settled in the first three months of the year.
Mark Shepherd, Head of General Insurance Policy at the
ABI, said: “It's encouraging to see
motor premiums have fallen for a second consecutive quarter,
offering some much-needed relief to drivers. But with the cost of
cover still weighing on household finances, we must not lose
momentum in tackling the persistent pressures driving up
claims. That's why we continue to urge the
Government to support the industry by investing in training for
the repair sector, improving road safety, and holding firm
against any rise in Insurance Premium Tax in the Autumn
Budget.”
ENDS
Footnotes
- The ABI's Motor Insurance Premium Tracker is the most
comprehensive in the UK, analysing nearly 28 million policies
sold a year. It's also the only collection that is based on the
price customers pay for their cover rather than what they are
quoted (which typically delivers higher averages). More on this
in our blog.
- Inflation adjusted data shows what historic costs would have
been if they faced the same inflationary pressures we're
experiencing today, uncovering the real growth or decline.
- At the beginning of this year, the ABI shared an update report on
its 10-Point
Roadmap which outlined the progress made in some key areas
including: tackling vehicle theft, cracking down on insurance
fraud and uninsured driving, helping consumers make informed
decisions, and reducing the impact of the Person Injury
Discount Rate (PIDR).
- Insurance claims for privately owned cars, based on data
which the ABI started collecting in 2013.
- We occasionally restate previously published figures when
updated data becomes available. Our Q1 2025 total
claims figure, published in May, has been restated as £3.1
billion.
Motor insurance provides financial protection in the event of an
accident. The largest element of what the pool of motor insurance
premiums pays for is compensation for injuries to other drivers,
passengers or pedestrians. That's because serious collisions can
mean life-changing injuries, with compensation sometimes running
into the tens of millions of pounds. The ABI's campaign 'power of the premium'
demonstrates the core principles of insurance and helps consumers
to understand what their premium pays for.
