By Tom Lawrie-Fussey, associate vice president product management, LexisNexis Risk Solutions, UK and Ireland
In a market as competitive as U.K. motor insurance, having a clear understanding of the wider landscape is critical. Insurance providers need to understand how they are performing relative to the rest of the market to contextualise their own results and make strategic decisions in an environment where small changes in behaviour or pricing can have a big impact on performance.
Shopping and Switching Ease as Motor Insurance Premiums Fall
2024 was marked by surging premiums and record levels of switching but as premiums started to fall in early 2025, shopping and switching behaviour altered. LexisNexis® Risk Solutions data shows around 20,000 fewer people per day shopped for motor insurance from January to the end of June 2025 compared to the same period in 2024.
Switching also slowed. In H1 2024, 25% of policyholders switched provider, but that figure fell slightly to 22% in H1 2025. Switching declined most noticeably in Q1 2025 before stabilising in Q2 as motor insurance premiums began to level off.
While this cooling trend in shopping seems closely tied to what’s been happening with premiums, it could be short-lived. With repair and theft costs rising[ii], there’s a growing expectation that motor insurance premiums will begin to climb again.
Smaller Insurance providers gain some ground
For two consecutive years, the U.K.’s Top 10 motor insurance providers dominated net policy gains —consistently winning more policies than they lost. Some of these new customers may have moved over to Top 10 insurers following market exits by RSA, Zurich, and Covea Direct.
However, in H1 2025, falling premiums appear to have given the rest of the market outside of the Top 10 an opportunity to gain some ground, with smaller insurance providers seeing a 30% increase in net customer gains.
This highlights how quickly consumer loyalty can shift when pricing pressures change. Some smaller brands appeared to capitalise on softer pricing conditions, while major players appeared to focus more on profitability and risk quality.
That dynamic could soon swing again. As premiums begin to edge upward — driven by higher repair costs and the ongoing rise in thefts — larger insurance providers, with their scale and pricing power, may start regaining ground.
Cancellations Tell Another Story
In H1 2025, policies from the Top 10 insurance providers were less likely to be cancelled within the first three months of starting, compared to the rest of the market. This suggests the biggest brands were attracting more consistent and loyal policyholders — likely supported by stronger risk assessment processes at the point of quote.
For smaller insurance providers, the picture is more mixed. Cancellations within three months of policy inception were 29% higher for providers outside the Top 10, implying that the net gain in customers came with a higher risk of churn or fraud.
At the same time, the Top 10 insurance providers acted faster when cancellations did occur. Based on the LexisNexis Risk Solutions data for insurer-led cancellations, the Top 10 cancelled 23% more policies during the first 15 days of policy inception H1 2025, compared to the same period in 2024. This trend points to more efficient fraud screening and early intervention.
Ageing Cars and Declining Values
Another telling trend revealed in the LexisNexis® Insurance Demand Meter U.K. H1 2025 is the continued ageing of the U.K.’s car parc. The average insured vehicle value has dropped by almost £500 since late 2023, from around £11,000 to £10,500. Over the same period, the average vehicle age increased by four months to nearly 11 years old.
This shift reflects ongoing economic pressures that have meant some motorists are holding onto their vehicles for longer. Despite this, the proportion of brand-new cars (less than one year old) in the insured vehicle mix has ticked up slightly — from 2.6% in late 2023 to 3.1% in H1 2025 — possibly aided by easing interest rates and improved access to finance.
What It Means for Insurance Providers
Falling premiums have brought relief to consumers, but the underlying pressures of rising repair costs and theft continue to mount. As these factors feed back into pricing, larger insurance providers may rebalance the win/loss ratio and attract customers away from their smaller rivals in 2026.
Having access to detailed, individual-level data is vital when pricing motor insurance, but it is the ability to place that insight within a broader market context that truly drives competitive advantage. Insurance providers that use the current period to look outside their own four walls will stand a greater chance of strengthening pricing discipline, enhancing fraud detection, and refining risk selection, putting in them in the best place to thrive when rates start to rise again.
|
