Indication motor premium falls slowing despite 13% yearly drop

The cost of motor insurance has fallen by 13% in the last 12 months, meaning drivers are now paying an average of £111 less for their cover each year.

This is according to the latest edition of the Confused.com and WTW Car Insurance Price Index, released yesterday (7 January 2026).

The drop now means that UK motorists spend an average of £726 per year on their cover, down from £837 in January of 2025.

Teenage drivers saw the greatest falls in insurance costs, with 17 year-olds seeing a dramatic 25% annual decrease (£636) and 18 year-olds seeing cover fall by 18% (£497) – overall, drivers in the under-25 age group saw premiums drop by 16% year-on-year.

Price improvements were not just limited to younger drivers, however, as all groups of motorists have seen double-digit price falls over the past year.

The figures marked only the latest falls in an ongoing trend of price competition. Indeed, average premiums are down 27% (£269) since a record peak in December 2023, when UK motorists were paying just shy of £1,000 a year for cover.

Slowing trend

However, there is an indication that the trend may be coming to an end, as the three-month period between September and November 2025 saw the smallest quarterly drop since the beginning of 2024 – just 1%.

Tim Rourke, UK head of P&C pricing, product, claims and underwriting at WTW, said: “Motorists have benefited from lower insurance premiums driven by a continued decline in personal injury claims through 2025.

”Most likely due to the whiplash reforms, bodily injury claims have now fallen from 16% of insurers’ spend in 2021 to 9% in 2025.

“While UK motor insurers can expect to break even in 2025, rising claims inflation and higher repair costs linked to increasingly complex vehicle technology may lead to losses in 2026, putting pressure on insurers to reverse the recent downward trend in prices.”