UK motor insurers expected to break even this year and dip into red in 2026

Motor insurers will only break even this year and re-enter loss-making territory in 2026, according to new figures from Ernst and Young (EY).

The data, published today (25 June 2025), showed that net combined ratios (NCRs) of 100% and 107% respectively are forecast for the next two years, following an NCR of 97% in 2024.

This means that for every £1 earned in consumer premiums in 2025, the sector is forecast to pay out £1 in claims and expenses, rising to £1.07 in 2026. This compares to 97p in 2024.

Dan Beard, UK insurance partner at EY, said: “Following just one year of underwriting profitability in the last three, UK motor insurers are once again bracing for challenge in an increasingly uncertain market.

“The rapidly changing geopolitical, economic and regulatory picture, alongside increasing levels of consolidation, are posing very real challenges to motor insurers as they look to steer their pricing and portfolios.”

Premium rates

The figures come following a return to inflation and falling premiums, which comes as a result of a softer market.

EY said that, following a rise of 14% in consumer premiums in 2024, it expects a 6% drop in consumer premiums this year, equating to an average saving of £35 per policy.

However, premiums are expected to pick up again in 2026, with a forecast premium rate rise of 5% – adding an average £25 back on per policy.

This is despite the expectation that the motor market will fall deeper into the red that year, as escalating claims costs outpaces the level of these price increases.

Beard said: “Despite this testing environment, insurers will be keenly aware of the need to continue to support customers with better propositions whilst carefully managing costs and delivering on regulatory commitments.”