UK Motor Insurance Returns to Profit in 2024
From the pits of loss to the win‑wire of gains
After two tough years of riding the loss‑wave, the UK motor insurance scene is finally ready to hit the green line in 2024. EY’s latest numbers show a Net Combined Ratio (NCR) dropping from a staggering 112.7% in 2023 to a respectable 93% next year. That’s a big leap, and it means the sector is looking as profitable as a Sunday morning at the seaside.
The pitch‑forked journey
- High claims & high costs—materials and labor were running up the train track like runaway elephants.
- Premiums lagging behind—the rates didn’t keep pace with the soaring claim inflation, making 2022 and 2023 feel like the “roller‑coaster of losses.”
- Weather clears up—inflation slowed, claim frequency pulled its weight, and middle‑of‑summer 2023 saw a boost from premium hikes.
What the numbers really say
EY figures show insurers are now paying out 93p in claims and operating expenses for every £1 in premiums. That’s a nice jump from the last year’s £1.13 paid out for every £1 earned.
Conclusion: The green light
With a forecasted 93% NCR, the motor insurance market tops its profitability lineup since 2020. Keep your eyes on this space—there’s a bright road ahead for UK insurers, and the road is looking less bumpy than it used to.
Consumer premiums are expected to rise 12% in 2024 (£68 per policy) but fall in in 2025
Consumer Insurance Premiums Jump 25% in 2023 & Set to Keep Ramping Up
Big news for your wallet: consumer premiums shot up a whopping 25% last year, as insurers finally matched their prices to the rising tide of inflation. The uptick is sticking around, nudging rates higher into 2024 – but at a gentler pace now that cost pressures have begun to ease.
What the Experts See on the Horizon
- 2024 Outlook: EY predicts another bump, with premiums climbing about 12% this year. That’s roughly an extra £68 per policy on average.
- 2025 Forecast: Market forces are expected to tighten the reins, rolling premiums back down by around 2% from the 2024 average. Customers could see a modest savings of about £7 per policy.
Why the Numbers Matter
These shifts mean your insurance bill could swell sooner than you wish, especially if you upgrade plans or add new coverage. Keeping an eye on policy terms and shopping around might help you manage the cost spike. And while a 2025 dip offers a little reprieve, staying proactive will keep your finances on track.
UK’s motor insurance sector expected to be back in the red in 2025
Motor Insurance’s Tightrope: Prices, Profits, and the 2025 Curveball
Even though costs have softened and claim filings are down, the growth of premium income slowed during the first half of 2024. Forecasts point to further rate cuts later in the year, and that wobble could trim earnings in 2025. EY’s latest numbers predict a profit slump for UK motor insurers, estimating a 101.6 % loss in the NCR for 2025.
Mat Wheatley weighs in
Mat Wheatley, UK Insurance Partner at EY, summed it up: “2022‑23 was a rough patch for insurers, battling big losses and tough‑pricing hikes for customers. This year, inflation’s cooling, claim costs are easing, and the balance sheet’s steadier—so the industry should bounce back in the short term, and shoppers can expect lower premiums in 2025.”
The 2025 roller‑coaster
- Geopolitical uncertainty keeps the wheel spinning.
- Regulators are tightening the reins.
- The 2025 Odgen discount‑rate tweak adds a new twist.
In short, insurers will have to juggle: keep the door open for customers, lock down costs, heed every regulatory twist, and drive sustainability and tech magic.
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