UK motor insurers paid out 3.2 billion pounds in Q1

By Rebecca Delaney

May 13 - (The Insurer) - UK motor insurers paid out 3.2 billion pounds ($4.2 billion) in car insurance claims in the first quarter of 2025, data from the Association of British Insurers showed on Tuesday.

This marks the highest quarterly claims total since the ABI began recording this data in 2013.

Increased claims costs were predominantly driven by repair costs, which totalled 2.1 billion pounds in the three-month period. The ABI noted that repair costs have been pushed up by higher labour costs, inflation and a shortage of skilled technicians.

The complexity of modern vehicles was also cited as a driver of more expensive repairs.

The high cost of claims for theft also contributed to the total amount, with the average claim for theft of or from a vehicle standing at 11,300 pounds.

Elsewhere, the average cost of motor cover dropped to 589 pounds in the first three months of 2025, a 5% decline from the previous quarter and down 7% from the prior-year period.

In February last year, the ABI launched a roadmap designed to tackle rising motor insurance costs. The roadmap outlined areas that the industry, government or regulators could improve on, including making more data available for consumers to understand which vehicles are more expensive to insure, and lowering insurance premium tax.

"The record claims this quarter underline that work must continue to address claims costs, for the good of consumers," said Mark Shepherd, head of general insurance policy at the ABI.

"We need the government to help us do this by addressing the skills and capacity challenge in the vehicle repair sector, improving the UK's roads and delivering its Road Safety Strategy. We also urge the government to not raise insurance premium tax at the Autumn Budget – a tax that penalises responsible drivers."