General Insurance Article - Home and Motor insurance set to unlock £500m annually

UK home and motor insurers could collectively unlock up to £500m in annual productivity savings, according to new Deloitte analysis. More than half (55%) of this saving opportunity sits within core operations, claims management, IT, and support functions - giving insurers significant scope to strengthen margins, fund reinvention and build resilience as market conditions continue to soften.

 

Deloitte modelling shows that AI-enabled claims transformation can materially improve claims performance, improving the time it takes to process a claim by up to 20%. In turn, and alongside other measures such as greater levels of digital self-service and straight-through processing of claims, productivity could be increased by up to 40%.

 

Dotun Aboaba, director at Deloitte, said: “The result is a faster, more efficient claims experience that allows home and motor claims professionals to focus more of their time on complex customer needs and value-adding activities.”

 

In the near term, home and motor insurers are expected to remain under pressure from falling premiums and rising claims costs. ABI data shows that average combined premiums fell 4.3% year on year, from £916 in Q1 2025 to £877 in Q1 2026, while Deloitte expects elevated materials inflation to continue driving costs higher.

 

However, over the longer term, Deloitte expects net earned premiums to grow at a compound annual rate of 2.5%, increasing from £22.8b to £26.4b by 2030. Insurers that act now and capture these productivity and efficiency savings could see their administrative expense ratio fall from 10.3% to 8.7% by 2030.

 

Jim Allen, partner at Deloitte, said: “The insurance market in the UK is at an inflection point. Insurers are entering a softer market at a time when claims inflation remains elevated, which means that they need to make changes to their operations now to ensure long term growth and future profitability.

 

"Capturing these savings requires more than incremental efficiency measures. It means redesigning work, embedding leading practices and using AI, automation and redesigned workflows to improve delivery economics without compromising customer, broker or business outcomes.”