U.K. motor insurers paid a record £11.7 bn in car insurance claims

Rising theft and repair costs have driven up premiums as U.K. motor insurers paid a record £11.7 bn in car insurance claims in 2024, according to the Association of British Insurers (ABI).

The UK motor insurance market achieved an underwriting profit, largely due to post-pandemic factors, including low levels of commuting resulting in fewer claims.

Motor insurers last year recorded a Net Combined Ratio (NCR) of 96.6%, according to EY’s latest UK Motor Insurance Results, which followed a NCR of 90.3% in 2021 – the industry’s best ever result.

The ABI’s latest claims data shows:     

• Over the course of 2024 insurers dealt with 2.4 mn motor insurance claims.  
• The average private motor insurance claim paid in 2024 rose 13% on 2023 to £4.9k. In the final quarter of 2024, the average claim hit £5.3k – an all-time high. 
• Vehicle repair costs totalled £1.9 bn in the fourth quarter 2024, taking the yearly total to £7.7 bn – another record high and £1.5 bn more than the 2023 yearly total.  
• The average claim for theft of and from a vehicle hit £11.2k in Q4 2024. 

Total claims payouts increased 17% from the previous year, with insurers handling 2.4mn motor insurance claims in 2024, the ABI reported. The average private motor insurance claim rose 13% to £4,900.

In the fourth quarter, the average claim reached £5,300, the highest on record. Vehicle repair costs totaled £1.9bn in the fourth quarter, bringing the 2024 total to £7.7bn, £1.5bn higher than in 2023.

The average claim for vehicle theft and related losses reached £11,200 in the fourth quarter.

The average cost of motor insurance in the fourth quarter was £621, 2% lower than the £635 recorded at the start of 2024. However, the annual average premium for 2024 stood at £622, reflecting a 15% increase of £78 compared to 2023.

Mark Shepherd, head of general insurance policy at ABI, said the latest data highlights ongoing challenges for both drivers and the industry.

He noted that while the ABI’s 10-Point Roadmap has helped lower average premiums from their peak, insurance costs remain a burden on household budgets as the industry faces rising expenses.

Our latest data paints a difficult picture for drivers and the industry alike. Through our 10-Point Roadmap, we’ve been working hard to help tackle the cost of motor insurance and we’ve seen progress in some areas, with average premiums having fallen from their peak. However, we recognise that the price of cover remains a strain on household finances whilst the industry faces significant cost pressures.  

Mark Shepherd, Head of General Insurance Policy at the ABI

Shepherd urged the government to address high claim costs and warned against increasing Insurance Premium Tax in the upcoming Spring Forecast, which could further strain households and businesses.

“Industry is doing all that it can, but it is now for government to take the necessary action to combat high claim costs. And it’s vital that government does not further increase costs for hard working households and businesses by raising Insurance Premium Tax at the upcoming Spring Forecast. We look forward to continuing to work with the government and wider sector to help support drivers and tackle claims costs.”   

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The ABI’s Motor Insurance Premium Tracker is the most comprehensive in the UK, analysing nearly 28 mn policies sold a year. It’s also the only collection that is based on the price customers pay for their cover rather than what they are quoted.

Motor insurance provides financial protection in the event of an accident. The largest element of what the pool of motor insurance premiums pays for is compensation for injuries to other drivers, passengers or pedestrians. That’s because serious collisions can mean life-changing injuries, with compensation sometimes running into the tens of millions of pounds.