Management consultancy Oxbow Partners expects the UK motor market to remain profitable this year and next after it recorded profits of around £2bn in 2025. It forecasts that profits will drop to £1.3bn this year and then fall further in 2027. It predicts a combined ratio for the market of 95% in 2026 and 96% in 2027.

In the face of rising claims costs and subdued premium growth, Oxbow believes that carriers will have to decide whether they prioritise growth or focus on protecting their margins.

The report states: “Insurers can no longer cut prices to gain market share without affecting overall profitability. They must focus on retention and improving efficiency in claims and expenses. The market is dominated by a handful of large players. As market participants reach scale, focus shifts from market share growth towards maintaining profitability.”

Oxbow says the implementation of the general insurance pricing practices will also encourage less aggressive pricing strategies going forward, which will impact the length and severity of the market cycles going forward.