UK motor insurers are on course to pay out more than they collect in 2026. EY forecasts a net combined ratio of 111%, which means the sector will spend £1.11 in claims and costs for every £1 of premium. The gap puts claims handling at the centre of both pricing and regulatory attention.
The cost picture
The ABI reports that motor insurers paid £2.9 billion in claims in the first quarter of 2026. Vehicle repairs accounted for £1.9 billion of that, up 3% on the previous quarter. The average accidental damage claim rose to £3,699, up 8% on the quarter, as integrated sensors and cameras make repairs more specialised and costly.
- Q1 2026 motor claims paid: £2.9 billion.
- Vehicle repair costs: £1.9 billion, up 3% quarter on quarter.
- Average accidental damage claim: £3,699, up 8% quarter on quarter.
- EY forecast net combined ratio for 2026: 111%.
Why the regulator is involved
In its first Regulatory Priorities report for insurance, published in February 2026, the FCA said too many people have poor claims experiences. The regulator committed to monitoring consumer outcomes in claims handling over the following 12 months and signalled a readiness to intervene where standards fall short.
The Motor Insurance Taskforce published its final report in December 2025. The group, which included the FCA, HM Treasury, the Competition and Markets Authority and the ABI, identified three drivers of claims cost: replacement vehicle and credit hire charges, longer repair lead times and higher parts prices, and the complexity of bodily injury claims.
Claims handling quality is now a Consumer Duty issue. Insurers that cannot show prompt, fair and consistent outcomes face supervisory scrutiny. In June 2026, LexisNexis Risk Solutions launched three data tools for motor claims designed to improve decisions at first notification of loss, when errors are cheapest to fix.
What this means for you
Higher claims costs feed back into the price you pay at renewal. The FCA’s focus on claims handling should mean faster, clearer decisions when you claim. If your claim is delayed or rejected, our guide to making an insurance claim and complaining about an insurer sets out your next steps.
Sources
- ABI, Motor Insurance Premium Tracker, Q1 2026 (published 30 April 2026).
- Insurance Business UK, “UK motor claims handling faces data overhaul as costs and regulators close in”, 25 June 2026.
- FCA, Insurance Regulatory Priorities report, February 2026.
- Motor Insurance Taskforce, final report, December 2025.
- EY, UK motor market net combined ratio forecast, 2026.