Total retail premiums written by motor insurers fell from £21.0bn to £19.5bn – a decline of around £1.5bn or 7%, according to the FCA's latest general insurance value measures data.

Despite the decline in the value of total retail premiums written, the average number of policies in force increased from 32.8m to 34.1m, indicating lower average premiums and an easing in the pricing pressures seen across the market in recent years.

While claims frequency showed a small decline, from 9.6% to 9.3%, claims acceptance rates remained high at 98.7%. The average claims payout increased slightly from £3,764 to £3,858, meaning that the percentage of premiums paid out in claims rose significantly from 54.2% in 2024 to 59.1% in 2025.

Cormac Bradley, senior actuarial director at insurance consultancy Broadstone, said: “The notable fall in motor insurance premiums will be welcome news for motorists after several years of sharp price increases. The increase in policies in force alongside lower premium income suggests affordability has improved as the exceptional claims inflation seen in recent years has begun to ease.

“At the same time, insurers are paying out a greater share of premium income in claims and average claim settlements continue to rise. While pricing conditions have improved for consumers, the underlying cost of motor insurance remains high and insurers will remain cautious about how far premiums can fall from here.”