Oxbow forecasts profit for motor insurance market

Oxbow Partners has predicted that the UK motor insurance market will be profitable over the next two years.

In its latest UK Motor Market Report, published yesterday (9 June 2026), the firm said it forecast a combined ratio for the market of 95% in 2026 and 96% in 2027.

This is despite a reduction prices, with Oxbow saying that the average premium reduced by 9% in 2025.

It also said that claims inflation was 3% in 2025, but is likely to increase given the uncertain geopolitical environment.

In turn, despite profitability over the next two years, market profit is set to reduce to £1.3bn in 2026 and will fall further in 2027.

Oxbow said: ”2025 was a record-breaking year for the UK motor insurance market, with profit of c.£2bn thanks largely to a step-change in pricing in 2023 and 2024, earning through in 2025.

”2026 should also be positive, though not as profitable as 2025.  We continue to believe that the UK motor insurance market will be fiercely competitive. Despite this the dynamics of the market have shifted and we expect a more rational pricing environment with shorter, less volatile pricing cycles.”

Rival forecast

This is a more upbeat view than Ernst and Young’s (EY), which said in December 2025 that the sector is expected to only break even in 2025 and be loss-making in 2026, with net combined ratios (NCRs) of 101% and 111% respectively forecast.

EY’s number crunching followed the onset of challenging soft market conditions in 2025.

Oxbow said that after a period of market softening in 2025, early indications are that pricing has started to turn in 2026.

”The latest update from Pearson Ham indicated a 1% rate increase across the first quarter as insurers find the bottom of the latest cycle,” it said.

“We expect that the market will look to reprice upwards for the rest of 2026, with rate increases to be accelerated by the conflict in Iran and its potential impact on inflation.”