Home and motor insurers could unlock £500m in annual productivity savings

UK home and motor insurers could unlock up to £500m in annual productivity savings by 2030.

New analysis from Deloitte, provided exclusively to Insurance Times, suggests 55% of the potential savings sits within core operations, claims management, IT and support functions.

Deloitte modelling also shows that artificial intelligence (AI)-enabled claims transformation can materially improve claims performance, improving the time it takes to process a claim by up to 20%. 

Dotun Aboaba, director at Deloitte, said: “The result is a faster, more efficient claims experience that allows home and motor claims professionals to focus more of their time on complex customer needs and value-adding activities.”

Soft market

This comes despite insurers facing a softer market, with average combined home and motor premiums falling 4.3% year-on-year from £916 in Q1 2025 to £877 in Q1 2026, according to ABI data.

At the same time, insurers continue to face rising costs, with Deloitte expecting elevated materials inflation to put further pressure on claims costs.

However, over the longer term, Deloitte expects net earned premiums to grow at a compound annual rate of 2.5%, increasing from £22.8bn to £26.4bn by 2030. 

Deloitte said insurers that act now and capture productivity and efficiency savings could see their administrative expense ratio fall from 10.3% to 8.7% by 2030.

Jim Allen, partner at Deloitte, said: “The insurance market in the UK is at an inflection point. Insurers are entering a softer market at a time when claims inflation remains elevated, which means that they need to make changes to their operations now to ensure long-term growth and future profitability.

“Capturing these savings requires more than incremental efficiency measures.

”It means redesigning work, embedding leading practices and using AI, automation and redesigned workflows to improve delivery economics without compromising customer, broker or business outcomes.”