Insurers Paid £3 Billion in Car Claims This Summer as Premiums Fell by £13

• ABI data shows the average motor insurance premium fell to £551 between July and September, down £13 on the previous quarter and £56 below the same period last year, the third consecutive quarterly fall.
• Insurers paid out £3 billion in motor claims over the same three months, with repair costs making up £1.9 billion of that total and theft-related claims adding a further £142 million.
• A falling national average does not mean every driver’s own renewal quote is getting cheaper, because postcode, claims history, car model and age still move individual prices in the opposite direction.

The Average Is Falling. Here Is Why Yours Might Not Be

The Association of British Insurers tracks what its members actually charge, not what comparison sites advertise, and its latest quarterly figures show the average car insurance premium dropped to £551 between July and September. That is down £13 on the second quarter and £56 cheaper than the same three months last year. It is also the third quarter in a row that the average has fallen, after a run of sharp rises through 2023 and 2024 priced many drivers out of shopping around at all.

For a driver whose renewal letter just landed with a higher number on it, that headline will not feel true. Both things are correct at once. The ABI figure is a market average across millions of policies of every type, and averages move differently to any single driver’s price, especially when the driver in question has a recent claim, lives in a high-theft postcode or insures a car in a pricier group than last year’s.

Where the £3 Billion Actually Went

Premiums falling while payouts stay enormous sounds contradictory until the claims breakdown is laid out. ABI members paid £3 billion in motor claims in the third quarter alone. Repairs accounted for £1.9 billion of it, or 64 percent, reflecting the cost of parts, paint and labour that has climbed steadily as cars have filled up with sensors, cameras and assisted-driving hardware that a basic bumper repair now has to recalibrate. Theft-related claims added £142 million on top, a figure that tracks with the rise in keyless relay theft of the UK’s most targeted models.

Every one of those repair and theft claims is paid for out of the same pool that premiums fund. Insurers can let the average premium fall only when claims costs ease enough to make room for it, which is why the current dip is being described internally as fragile rather than a new trend. A bad winter for weather damage or a renewed spike in theft could reverse it within a quarter or two.

Why a National Average Can Fall While Your Quote Rises

An average is built from every policy an insurer writes, including the large block of long-term customers with clean records in low-risk postcodes whose prices tend to drift down when the market softens. A driver who does not fit that profile, perhaps because they have moved to a street with a higher theft rate, swapped into a car in a steeper insurance group, or made a claim in the last twelve months, can see their own renewal rise at the exact moment the market-wide figure is falling. Age still matters too: insurers continue to load premiums for the youngest and oldest drivers regardless of what the overall average is doing.

Postcode remains one of the sharpest dividers. Urban areas with higher rates of theft, vandalism and accident density consistently sit well above the £551 average, while rural areas with lower claims frequency sit below it. A driver moving house, even a short distance, can see their renewal shift by a noticeable margin purely on the strength of the new postcode’s claims data.

What to Do if Your Renewal Has Gone Up Anyway

The ABI figure is a useful reality check rather than a personal guarantee, and drivers whose renewal quote has risen should treat the national fall as a reason to push back rather than accept it. Getting at least three comparison quotes before a renewal date, rather than auto-renewing, remains the single most effective way to find the saving the average implies is out there. Checking whether a black box or telematics policy would suit low-mileage driving, confirming that a car’s security rating has not changed, and querying any claim that was recorded against the policy but was not the driver’s fault can all shift an individual quote back toward where the market average suggests it should sit.

It is also worth asking an insurer directly what is driving an increase when the market average is falling. Under FCA rules insurers have to be able to explain pricing decisions, and a direct question can surface a factor, such as an old claim still on file past the point it should be weighted, that is straightforward to correct once flagged.

A Fall That May Not Last

Three quarters of falling premiums follow two years in which the average motor premium rose sharply, so the current dip is still recovering ground rather than breaking new low territory. With £1.9 billion of the latest quarter’s claims going on repairs alone, and the cost of fixing a modern car continuing to climb, insurers have signalled that the fall is not guaranteed to continue into next year. Drivers who do see a cheaper renewal this quarter would do well to lock it in rather than assume next year’s letter will bring the same news.

Sources:

• Motor insurance premiums fall for third straight quarter, Bodyshop Magazine
• Motor insurance prices rising again after two years of falls, Insurance Business UK