Insights ¦ Motor Insurance Claims Analysis

Key Take Aways

• Motor insurance premiums increased notably between 2022 and 2024, placing affordability pressure on consumers amid rising claims costs.
• Claims costs related to vehicle repair, property damage, and accidental damage constitute 65% of overall claims growth, driven by longer repair times, more complex vehicles, labour shortages, and higher parts costs.
• Average claims costs surged by 37% from 2019 to 2023, with a 41% rise in claims cost per policy, reaching nearly £400 in 2023 despite claims frequency decreasing.
• The overall claims incurred increased by £2.3bn (34%) over the period, predominantly driven by accidental damage, property damage, and theft.
• Underwriting profitability deteriorated amid claims ratios exceeding 67%, with many firms experiencing underwriting losses in 2022 and 2023 due to claims inflation.
• The cost of bodily injury claims, while not increasing as rapidly, saw substantial growth in average claim values, notably for large injury claims, driven by rising care costs, longer settlement durations, legal expenses, and increased severity.
• Vehicle theft claims increased in value by 49%, with higher vehicle values and sophisticated theft methods contributing to costs rising from £298m in 2019 to £533m in 2023.
• Fraud continues to evolve, with confirmed fraud cases rising and sophisticated tactics such as Generative AI being exploited; suspected fraud decreased, possibly due to improved detection.
• Uninsured driver claims handled by the Motor Insurers’ Bureau increased from £329m in 2019 to £452m in 2024, alongside rising levies, contributing to market costs.
• The frequency of vehicle thefts rose marginally, but cost per incident increased significantly, emphasising the need for stronger vehicle protection measures and enforcement.
• Involvement of third parties like credit repair and claims management companies (CMCs and AMCs) adds complexity and elevates costs, affecting customer outcomes and claims durations.
• Micro-mobility-related claims, especially involving e-scooters, are rising and pose new challenges for risk management, law enforcement, and policy calibration.

Key Statistics

• UK motor insurance policies sold in 2024: over 44 million, with premiums exceeding £20 billion.
• Average premiums increased by 23% from £443 in 2019 to £545 in 2023; further rose to approximately £619 in H1 2024.
• Claims costs escalated by 37% (from £2,410 in 2019 to £3,293 in 2023), with claims cost per policy rising from £309 to £391 over the same period.
• Total claims incurred increased by £2.3bn (34%) from 2019 to 2023.
• Claims related to accidental damage and property damage grew by 52% and 44%, respectively, contributing most to overall claims growth.
• Theft claims value rose by 79%, with costs escalating from £298m to £533m.
• Confirmed fraud increased from 4,423 cases (£49m) in 2019 to 6,263 (£65m) in 2023; suspected fraud, however, declined from 40,106 (£423m) to 29,892 (£316m) over the same period.
• Uninsured driver claims cost ballooned from £329m to £452m; MIB levies increased from £331m to £507m.
• Average repair costs for petrol/diesel vehicles: increased by 42% (from £2,350 to £3,344); for electric vehicles: up 44%, hybrid: up 68%.
• Credit hire costs for GTA claims: up 12% daily rate (£67 to £75), with total costs rising by 47% (£1,295 to £1,901); non-GTA costs up 62% (£1,564 to £2,537).
• Average duration from FNOL to final settlement rose by up to 28%, notably for property damage and accidental damage.
• Vehicle write-offs increased in number by 9%, with higher average recovery rates (+49%), alongside a 42% rise in average repair costs.

Key Discussion Points

• Accelerated claims costs are primarily driven by inflation in vehicle values, repair times, parts prices, and labour costs, despite a slight decline in claims frequency.
• The impact of longer repairs, supply chain issues, and skilled labour shortages is amplifying claims durations and costs across all damage categories.
• Third-party involvement through CMCs and AMCs is increasing process complexity, prolonging claims cycles and raising costs.
• The significant rise in bodily injury claim costs is linked to long-term care expenses, legal complexities, and increased severity of injuries from new mobility modes like e-scooters.
• Rising vehicle theft, with sophisticated tech enabling theft-attempts and high vehicle values, is substantially raising claims costs and criminal activity risks.
• Evolving fraud tactics involving AI-generated damage images, social media scams, and layered injuries are increasing detection complexity and costs.
• The burden of uninsured drivers remains substantial, with the MIB reporting increased claims costs and levies; tougher enforcement and checking measures are recommended.
• The involvement of professional stakeholders and policy interventions (e.g., tariffs, penalties) could help contain rising bodily injury and repair costs.
• The industry faces the challenge of maintaining customer service quality amid cost pressures and complex claims handling processes.
• Enhancing data sharing and transparency among insurers, regulators, and stakeholders is vital to combating fraud, theft, and unnecessary cost escalation.
• The report underscores the necessity for coordinated cross-sector action involving industry, government, and professional bodies to address claims inflation and societal safety challenges.

Document Description

This article provides a comprehensive analysis of the UK motor insurance claims landscape as of mid-2025, based on a review of data from 12 leading insurers. It explores key drivers of claims cost escalation, including vehicle repairs, bodily injury, theft, fraud, and uninsured driving, highlighting how legislative, technological, and supply chain factors influence market trends. The article also offers targeted recommendations aimed at industry, government, and regulators to improve affordability, control costs, and enhance customer outcomes in the evolving motor insurance environment.