What Insurers’ Record £3.2 Billion Payout Means for Every UK Driver’s Premium

• Insurers paid out a record £3.2 billion to UK motor customers in the second quarter of 2026, up 7 percent on the same period last year, according to the Association of British Insurers.
• The average claim now costs £4,900, up 4 percent in a single quarter, while the average windscreen repair rose 7 percent to £283.
• Even with the record payout, the average premium still rose £6 to £566 in the quarter, showing the record claims bill is being passed straight back to drivers.

A Record £3.2 Billion Payout, and Your Premium Still Went Up

Insurers handed UK motorists a record £3.2 billion in claims payments in the second quarter of 2026, the Association of British Insurers reported, a 7 percent rise on the same three months last year and a 5 percent rise on the first quarter. It is the largest sum the ABI has recorded insurers paying out to motor customers in a single quarter. It arrives at the same time as average premiums, which most drivers would expect to fall when claims costs are already covered by the pot insurers collect, rose again instead of easing.

The average car insurance premium climbed £6, or 1 percent, to £566 over the quarter, the ABI’s own figures show. After adjusting for inflation, that is actually £14 lower than the same quarter of 2025, so the headline number is not as bad as it first looks. But it is still a rise in cash terms, at the exact moment insurers are telling the public they are paying out record sums to cover the cost of fixing and replacing cars.

Where the £3.2 Billion Actually Went

The average motor claim cost £4,900 in the quarter, up 4 percent on the previous three months. That figure covers everything from a minor bump to a total write-off, and it has been rising steadily as repair bills climb faster than general inflation. A single, specific line in the data shows why: the average windscreen repair now costs £283, up 7 percent in a single quarter. A windscreen replacement used to be one of the cheapest claims an insurer would process. Modern windscreens carry cameras, sensors and heating elements for driver assistance systems, and replacing one now means recalibrating those systems as well as fitting the glass, which is why a job that cost a fraction of that five years ago now runs into hundreds of pounds.

Chris Bose, the ABI’s director of general insurance and international policy, said insurers were “working hard to keep premiums competitive and affordable for customers” as claims costs keep climbing. The ABI’s figures sit against the backdrop of a Motor Insurance Taskforce report published in December 2025, which examined why claims inflation has run so far ahead of general price rises across the UK car parc.

Why Repairs Keep Getting More Expensive

Three things are driving the rise in the average claim, and none of them are going away soon. New cars carry far more electronics than the vehicles they replace, from radar-guided cruise control to lane-keeping cameras mounted behind the windscreen, and every one of those parts needs specialist calibration after even a minor repair. Garages capable of doing that work safely are in short supply, and insurers have been warning for over a year that a skills shortage in the repair sector is adding weeks to turnaround times and pushing up labour costs industry-wide. Parts prices have also climbed, partly because manufacturers restrict who can supply genuine components and partly because global supply chains for electronics have not fully settled since the disruption of the early 2020s.

None of that is visible to a driver renewing a policy. What they see is a premium that moved the wrong way even as insurers publicly reported record payouts, which is the part of this data that will feel unfair to anyone expecting the market to ease once claims costs peak.

How This Compares With What Drivers Are Actually Quoted

The ABI’s £566 figure covers the average across every live motor policy in force, including customers who have stayed with the same insurer for years without shopping around. A separate measure from Confused.com, which tracks the quotes offered to new and switching customers rather than existing policyholders, put the average at £713 in the third quarter of 2026, a figure that has actually fallen 3 percent over the same period. Read together, the two numbers tell a consistent story: insurers are competing hard for new business and cutting headline quotes to win it, while the much larger pool of existing customers who do not switch each year are quietly absorbing the cost of the record claims bill through smaller, steady rises that rarely make a headline on their own.

That gap between what a new customer is quoted and what an existing one is charged is sometimes called the loyalty penalty, and the ABI’s own numbers this quarter give it a concrete shape. A driver who has not compared their policy against the open market in the past year is statistically more likely to be one of the people whose premium rose £6 while the overall quoted market fell £6 in the opposite direction.

What a Record Claims Bill Means for Your Own Renewal

A rising national claims bill does not mean every individual premium has to rise. It means insurers are repricing risk more aggressively at the margins, and the drivers most likely to be asked to cover the difference are those who do not shop around. A policy that auto-renews without comparison is the easiest way for an insurer to recover rising claims costs from a customer who is not actively checking the market, because that customer has already shown they will accept whatever figure appears on the renewal notice.

Checking a renewal quote against the wider market every year, rather than every few years, is the most direct way to avoid absorbing more than a fair share of the rise in claims costs. It is worth asking specifically whether windscreen cover, now one of the fastest-rising cost lines in the whole claims pot, carries a separate excess on the policy being offered, since insurers have started adjusting that excess upward in response to the £283 average repair cost. A driver who checks that single line can often find several hundred pounds of difference between competing policies for identical cover elsewhere.

It is also worth asking an insurer directly, at renewal, whether the premium reflects a specific claims experience on that car or that postcode, rather than an across-the-board rise applied to every customer. Insurers are not obliged to volunteer that information, but many will explain the pricing if asked, and a driver with a clean claims record who is still seeing a rise in line with the national 1 percent average has grounds to push back or switch.

The Parts of a Claim Insurers Rarely Explain

Most drivers only see the headline cost of their own claim, not how it fits into the £3.2 billion total the ABI reports for the whole market. A single claim can carry several separate cost lines that add up fast: a courtesy car for the repair period, a hire car if the damage keeps a vehicle off the road for weeks rather than days, diagnostic and recalibration charges for any camera or sensor near the damaged panel, and VAT on top of every labour and parts invoice. None of those lines are optional extras an insurer is doing a driver a favour by covering. They are baked into the £4,900 average claim figure, and a driver who understands which parts of that bill are negotiable, particularly the choice of repairer and whether a manufacturer-approved garage is actually required for the specific repair, can sometimes reduce the final cost without affecting the quality of the work.

Asking an insurer which network repairer they use, and whether an independent, Thatcham-approved garage can be used instead, is a reasonable question at the point a claim is opened. Some insurers will say no because of contractual arrangements with their chosen repair network, but others will allow it, and the price difference between a manufacturer franchise and an approved independent garage for the same recalibration work can run into hundreds of pounds on a single job.

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Sources:

• Association of British Insurers: Record £3.2 Billion Paid Out to Support Motor Insurance Customers in Q2 2026