The latest data from the ABI’s quarterly premium tracker shows that the average cost of motor insurance has fallen by £60 over the past year.1 For the period April to June 2025, the average premium was £562 - down from £622 in the same quarter of 2024. When adjusted for inflation, the real-terms decrease is even more pronounced, amounting to an £81 drop year-on-year.2
Premiums also fell by £19 (3%) compared to the first quarter of the year. This marks the second consecutive quarterly decline, following a £40 (6%) drop in Q1 2025.
While premiums have fallen from their peak, the industry’s efforts to tackle the cost of insurance through its 10-Point Roadmap continues as claims pressures persist. 3
ABI members paid out £3.1 billion in car insurance claims during the second quarter of the year,4 maintaining the record-breaking level of quarterly payouts first reached in Q1.5
Repairs continue to be a major contributor to elevated claims costs - increasing by £100 million from Q1 to £2.1 billion.
Rising repair costs stem from a range of pressures. The increasing sophistication of today’s vehicles - featuring complex electronics, advanced sensors, and integrated systems - has made repairs more intricate and time-consuming. Broader economic inflation continues to impact the price of parts, materials, and operational overheads. Compounding the issue is a shortage of skilled technicians, which slows repair times - further inflating costs.
The high cost of claims for theft also played a role in the record payouts, as the average claim for theft of and from a vehicle increased by £319 (3%) on the previous quarter to £11.8k.
Throughout the quarter, insurers settled 669,000 claims - 5% more than 639,000 settled in the first three months of the year.
Mark Shepherd, Head of General Insurance Policy at the ABI, said:
“It’s encouraging to see motor premiums have fallen for a second consecutive quarter, offering some much-needed relief to drivers. But with the cost of cover still weighing on household finances, we must not lose momentum in tackling the persistent pressures driving up claims. That’s why we continue to urge the Government to support the industry by investing in training for the repair sector, improving road safety, and holding firm against any rise in Insurance Premium Tax in the Autumn Budget.”
ENDS
Footnotes
- The ABI’s Motor Insurance Premium Tracker is the most comprehensive in the UK, analysing nearly 28 million policies sold a year. It’s also the only collection that is based on the price customers pay for their cover rather than what they are quoted (which typically delivers higher averages). More on this in our blog.
- Inflation adjusted data shows what historic costs would have been if they faced the same inflationary pressures we're experiencing today, uncovering the real growth or decline.
- At the beginning of this year, the ABI shared an update report on its 10-Point Roadmap which outlined the progress made in some key areas including: tackling vehicle theft, cracking down on insurance fraud and uninsured driving, helping consumers make informed decisions, and reducing the impact of the Person Injury Discount Rate (PIDR).
- Insurance claims for privately owned cars, based on data which the ABI started collecting in 2013.
- We occasionally restate previously published figures when updated data becomes available. Our Q1 2025 total claims figure, published in May, has been restated as £3.1 billion.
Motor insurance provides financial protection in the event of an accident. The largest element of what the pool of motor insurance premiums pays for is compensation for injuries to other drivers, passengers or pedestrians. That’s because serious collisions can mean life-changing injuries, with compensation sometimes running into the tens of millions of pounds. The ABI’s campaign 'power of the premium’ demonstrates the core principles of insurance and helps consumers to understand what their premium pays for.