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.
ABI members paid out £3.1 billion in car insurance claims during the second quarter of the year, maintaining the record-breaking level of quarterly payouts first reached in Q1.
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.”
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