Average UK motor premiums fall 9%: ABI

By Navneeta Nandan

Aug 13 - (The Insurer) - The average cost of a UK motor insurance policy fell to 562 pounds ($761.90) in the second quarter of 2025, a drop of 60 pounds from the same period last year, according to the Association of British Insurers (ABI).

UK motor insurers paid 3.1 billion pounds in car insurance claims during the second quarter, just below the record 3.2 billion pounds paid out in the first quarter.

Repair costs were again a major driver of the elevated claims experience, having increased by 100 million pounds from the first quarter to 2.1 billion pounds.

The growing sophistication of vehicles has made repairs more intricate and time-consuming, pushing up costs. Higher parts and materials costs due to inflation and a lack of skilled technicians also pushed up repair costs, the ABI said.

The average claim for theft of and from a vehicle increased by 3%, or 319 pounds, from the previous quarter to 11,800 pounds.

After factoring in inflation, the real-terms year-on-year decrease in the average cost of motor insurance amounted to 80 pounds in the second quarter.

Premiums fell by 3%, or 19 pounds, when compared to the first quarter of the year. This is the second consecutive quarterly decline, after a 6%, or 40 pound, decline in the first quarter of 2025.

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."

In February last year, the ABI launched a roadmap designed to tackle the 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 premium tax.