Motor insurers paid out more money to UK drivers last quarter than at any point on record. You'd think that would be reassuring. According to new research, over a third of policyholders are still too nervous to actually use the cover they're paying for.
The Association of British Insurers' latest Motor Insurance Premium Tracker shows insurers paid out a record £3.2 billion to support motor customers in the second quarter of 2026, up 5% on the previous quarter and 7% on the same period last year. The average claim payout rose to £4,900, itself up 4% quarter on quarter, driven largely by the rising cost of fixing modern cars. Windscreen repairs alone jumped 7% to an average of £283, as sensors, cameras and driver-assistance kit built into modern glass keep pushing repair bills higher.
Premiums, meanwhile, barely moved. The average policy rose by just £6 to £566 over the quarter, and once you adjust for inflation, that's actually £14 cheaper than the same period in 2025. Chris Bose, the ABI's director of general insurance and international policy, framed this as evidence insurers are working hard to keep cover affordable "despite ongoing high claims costs," and called for government support on repair sector skills and parts availability to help keep costs down further.
That's the supply side of the story. The demand side, published the same week by credit bureau CRIF, tells a less comfortable one. CRIF's research found that 35% of UK motor policyholders are now afraid to make a claim for fear of pushing up their own premiums, up from 33% just a year ago. Motor cover is the most widely held type of insurance among UK adults, at 59%, ahead of home buildings insurance on 53% and contents on 51%, which makes that reluctance to claim on it a live pricing problem rather than a niche worry.
The UK isn't just anxious by its own standards. CRIF's figures put UK policyholders' claim-related fear above the European average of 31%, behind only Ireland at 41%, and well ahead of Italy, where the figure sits at just 18%. Sara Costantini, CRIF's UK and Ireland regional director, said that with premiums due to rise again, many drivers remain seriously concerned about claiming on cover they "cannot easily go without," and argued insurers need to rebuild that trust as part of getting costs down.
There's a wider affordability squeeze sitting behind both sets of numbers. Insurance Business has reported that motor insurance prices are rising again after two years of falls, with EY projecting UK motor insurers will pay out £1.11 in claims and expenses for every £1 of premium collected this year, up from £1.01 in 2025 and 97p in 2024. Repair costs are doing a lot of that damage: ABI data shows the average accidental damage claim rose 8% to £3,699 in the first quarter of 2026 alone, and repair bills accounted for 64% of total motor claims by Q3 2025.
Separate analysis from consultancy Broadstone, drawing on the FCA's Financial Lives Survey, adds another layer worth watching. More than one in seven motorists have reduced their level of cover in the past two years, rising to a quarter among those already carrying heavy credit burdens. Nearly four in five of those switching or renewing said their premium had increased noticeably, up sharply from under half in 2022.
Put the two stories together and a fairly awkward picture emerges for the market. Insurers are paying out record sums and holding premium rises to a minimum in cash terms, yet a growing share of customers still don't trust the relationship enough to use the product they're paying for. CRIF's own findings offer a possible way through: a quarter of drivers said they'd be willing to share more data with insurers if it unlocked more affordable premiums, suggesting the fix may lie less in marketing reassurance and more in the kind of smarter underwriting and pricing that both CRIF and the ABI are, from different angles, pointing towards.
