Avoiding the Potholes – Profitability in the UK Motor Market
May 27, 2025
We are pleased to launch our highly anticipated 2025 Motor Market Report: Avoiding the Potholes – Profitability in the UK Motor Market.
- Profitability Forecast: The UK motor insurance market is projected to have a combined ratio of 93% in 2025 and 96% in 2026, indicating strong but slightly reduced profitability compared to 2024. Market profit is expected to decline to £1.2 billion in 2025 and further in 2026.
- Premium and Growth Trends: Gross Earned Premium (GEP) growth is forecasted at 0.5% in 2025, despite a 1.5% decline in Gross Written Premium (GWP). Rate reductions in Q1 are set to reverse in the second half of the year.
- Loss and Expense Ratios: The market loss ratio is expected to rise by 2 percentage points to 69% in 2025 and further to 72% in 2026. The expense ratio will slightly increase to 24% in 2025, mitigated by cost-cutting and market consolidation.
- Claims Inflation: Claims inflation reached 10% in 2024 and will remain high in 2025, driven by severity inflation outweighing improvements in claim frequency.
- Avoiding the potholes for a more stable market: The 2022 GIPP regulations have restricted price reductions for new business, pushing insurers to prioritise customer retention and operational efficiency. In addition, the top three insurers now hold 55% of the market, potentially fostering a more stable pricing environment. We expect consolidation to continue. CEOs should be developing M&A strategies to navigate this evolving landscape.
About the authors
Paul De’Ath leads the Oxbow Partners Market Intelligence team. Prior to joining Oxbow Partners Paul spent nine years as an equity research analyst covering all aspects of insurance across the UK and Europe. He started his career as an accountant and also spent some time in industry at Standard Life.
Tony Sault recently joined Oxbow Partners as a Partner with a remit to focus on the Retail Personal and Commercial Lines markets, advising insurer and broker clients on strategy and transformation. Tony started his career over 30 years ago at RSA before moving into consultancy where he spent almost 20 years at EY and Chaired the annual EY UK Motor and Home Results Seminars.
