Motor insurance premiums are expected to decline slightly in 2025 before increasing again the following year, according to new forecasts from EY.
The report predicts that UK motor insurers will break even in 2024, with a net combined ratio of 100%. However, that figure is expected to rise to 107% in 2025—indicating losses—prompting insurers to pass on higher costs to policyholders in 2026.
As a result, average premiums are expected to fall by 6% in 2025, followed by a 5% increase in 2026. Over the two-year period, this would result in an overall £10 drop in premiums. This follows a 14% surge in average motor insurance prices in 2023.
Dan Beard, UK insurance partner at EY, said: “Following just one year of underwriting profitability in the last three, UK motor insurers are once again bracing for challenges in an increasingly uncertain market.
“The rapidly changing geopolitical, economic, and regulatory landscape—alongside rising levels of consolidation—is putting real pressure on insurers as they try to manage pricing and risk. Additionally, lower premiums charged earlier this year are expected to hit profits,” he added.
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