"As price stability returns to the market insurers are seeking to compete on non-price factors in order to differentiate and exploit new market opportunities."
Thomas Slide, Category Director
The UK motor insurance market has proven resilient in the face of volatile macroeconomic trends. Average premiums fell between Q1 2024 and Q3 2025, yet the sector still generated £16.6 billion in gross written premiums in 2025. This decline was driven largely by increased competitive activity and easing inflation, even as the car parc continued to grow.
Average claim values have increased by 23.8% since 2020, reflecting the higher costs associated with advanced vehicle technologies such as EVs and ADAS. The widening gap between stagnant premiums and climbing claims is squeezing underwriting margins, pushing insurers to shift away from price-focused competition towards differentiation based on service, reassurance and broader value-added offerings.
Looking ahead, the market’s biggest opportunity lies in harnessing telematics, usage-based insurance (UBI) and multi-year, value-led products to create personalised savings and deepen customer loyalty. However, the most significant threat on the horizon is a projected slowdown in car-parc growth post-2028, as changing urban mobility policies, the rise of shared transport solutions and VED reforms are set to curb private vehicle ownership and restrict potential growth in premium volumes.
This Report examines the UK market for domestic motor insurance. Commercial vehicle insurance is excluded.
Most domestic motor insurance policies relate to private car insurance, which is the focus of the consumer research (i.e. cover for cars that are used by individuals for private purposes). As such, the terms ‘motor insurance’ and ‘car insurance’ are used interchangeably throughout the Report.
Market size data is sourced from the ABI, using the following definitions:
Motor insurance covers damage to or loss of motor vehicles operating on land, as well as all liabilities arising from their use.
Domestic motor insurance refers to vehicles where the main purpose is to transport nine or fewer non-fare paying persons (where each vehicle is individually rated; or the person insured is not a corporate or partnership and the number of vehicles insured is three or less) or 10 or more non-fare paying persons (where the persons insured are not a corporate or partnership and each vehicle is individually rated).
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