UK Motor Insurance Premiums Set to Climb Again in 2026 as Repair Costs and War Disruption Bite

The deflationary period that gave British drivers relief on car insurance appears to be ending. After roughly two years of sharp increases through 2023 and 2024 followed by six straight quarters of falling prices, UK motor insurance premiums are turning higher again, and industry researchers expect the upward trend to continue through 2026.

Data from Consumer Intelligence's car insurance index show average quoted premiums rose 4.5% in the first quarter of 2026, the first quarterly increase since the first quarter of 2024, ending a period of relative stability. On an annual basis, average quoted premiums were 2.4% higher. The number of price-cut promotions advertised on price-comparison websites also fell sharply, dropping from 98 in October 2025 to 72 in April 2026, signalling that insurers and aggregators are shifting strategy away from discounting. All eleven British regions recorded quarterly inflation, with Scotland and London leading the annual increases.

The cost pressures behind the turn are mounting. Of the £2.9 billion UK insurers paid in motor claims in the first quarter of 2026, £1.9 billion went to vehicle repairs alone, up 3% on the prior quarter, while the average accidental-damage claim reached £3,699, an 8% jump in a single quarter. Modern vehicles, packed with sensors, cameras, electric and hybrid powertrains, and advanced driver-assistance systems, are expensive to repair, and a shortage of skilled technicians adds to labour costs. Analysts at Oxbow Partners note that the US-Iran war has constricted supply chains and the flow of fuel and automotive parts into the UK, with severe claims-cost inflation expected to run around 7% in 2026.

The profitability outlook reflects these strains. While 2025 was a record year for UK motor underwriting profit, estimated at around £1.96 billion, Oxbow Partners expects sector profits to fall to just over £1.3 billion in 2026, and EY forecasts the net combined ratio will worsen from 101% in 2025 toward 111% in 2026, meaning insurers would pay £1.11 in claims for every £1 of premium collected. EY's central estimate points to average premiums rising about 3%, or roughly £15 per policy. With the US-Iran ceasefire now easing some pressure on fuel and parts supply chains, the trajectory for the second half of the year will hinge on whether repair-cost inflation cools.