EY warns of rising motor insurance premiums in 2026
Motor insurance premiums are expected to fall slightly this year before rising again in 2026 as insurers face persistent claims inflation.
According to the latest EY forecasts, motor insurers will break even in 2024 with net combined ratios of 100%.
However, it predicts that this will rise to 107% next year, with insurers passing on these losses to policyholders.
As a result, average premiums are expected to fall by six per cent during 2025 before rising by five per cent in 2026, leading to an overall decrease of £10 in premiums over the two-year period. This comes after a 14% rise in average motor insurance premiums last year.
Dan Beard, UK insurance partner at EY, said: “Following just one year of underwriting profitability in the last three, UK motor insurers are once again bracing for challenge in an increasingly uncertain market.
“The rapidly changing geopolitical, economic and regulatory picture, alongside increasing levels of consolidation, are posing very real challenges to motor insurers as they look to steer their pricing and portfolios. At the same time, lower premiums charged during the first half of this year are set to impact the bottom line.
“Despite this testing environment, insurers will be keenly aware of the need to continue to support customers with better propositions whilst carefully managing costs and delivering on regulatory commitments.”
