UK motor insurers will return to profit this year, according to EY’s latest UK Motor Insurance Results.
After two years of losses, it expects the UK motor insurance market to record a net combined ratio (NCR) of 93%. This represents a significant improvement on last year’s NCR of 112.7%.
Recent losses have been attributed to high claims, material, and labour costs, alongside premium rates below claims inflation levels.
However, lower inflation, higher premiums and improvements in claims frequency means that UK motor insurers paid out 93p for every £1 received in premiums.
UK motor insurers
Mat Wheatley, UK insurance partner at EY, comments: “2022 and 2023 were challenging years for motor insurers, who had to contend with significant losses, and for consumers, who faced sharp premium increases. But this year, falling inflation, easing claims costs and stabilising balance sheets mean the sector is expected to return to profitability in the short-term, and customers should see lower premiums in 2025.
“Overall, uncertainty around the geopolitical environment, heightened regulatory scrutiny, and the impact of the 2025 Ogden discount rate change are the biggest challenges for motor insurers. This means 2025 will again be a balancing act for firms, as they continue to support customers, carefully manage costs, keep pace with regulatory change and pursue sustainability and tech transformation.”
Looking ahead, EY expects motor insurance premiums to fall by two per cent next year after a 12% rise this year and the 25% uplift in 2023.
