UK motor insurance premiums rose 2.1% in the second quarter of 2026, Defaqto's Market Pricing Motor Insurance Price Index shows. The rise marks the second consecutive quarterly increase after two years of sustained falls in the UK personal lines motor market.
The two quarterly rises combined to push competitive motor prices up 3.6% in the first half of 2026. The year-on-year gap has closed sharply: premiums are now just 0.8% lower than a year ago. At the end of 2025, the equivalent deficit stood at 11.4%.
The sharpest monthly movement came in April, when average top-five quoted premiums rose 1.8%. May added 0.6%, while June recorded a slight fall of 0.2%, a movement Defaqto said may indicate the pace of increases is beginning to moderate.
The Defaqto data confirms a pricing cycle reversal underpinned by rising claims costs. Per Association of British Insurers data, repair costs reached £1.9 billion in Q3 2025, equivalent to 64% of total motor claims. The average accidental damage motor claim rose 8% to £3,699 in Q1 2026, per ABI data.
EY has projected that UK motor insurers will pay out £1.11 in claims and expenses for every £1 of premium collected in 2026. That implies a net combined ratio of 111%, up from 101% in 2025 and 97% in 2024.
Premium movements are not uniform across the market. In Q2, price movements among large motor insurers ranged from falls of 2.7% to rises of 11.9%. Over the 12-month period, year-on-year provider movements ranged from -4% to +13%.
Defaqto data also show pronounced divergence by customer segment. By annual mileage, prices have risen most for the lowest mileage drivers while premiums for higher mileage drivers have levelled off or fallen.
Stephen Kennedy, director at Defaqto, said the June data suggested the market was not following the trajectory of the 2022-23 pricing cycle. "Q2 confirms that the motor insurance market has moved into a harder pricing phase, but this is not a repeat of the extreme inflationary cycle we saw in 2022 and 2023," he said. He added that pricing was becoming more targeted and aligned to individual provider strategies rather than a broad-based premium surge.
Francis Luery, product manager at Defaqto, said the mileage data indicated insurers were making more granular pricing decisions rather than applying market-wide increases. He added that shopping around would remain important for consumers as prices rose. For insurers and brokers, he said, the key challenge would be explaining price changes clearly while competing for business.
Defaqto said the outlook for motor was more stable than during the previous pricing cycle. Kennedy said the remainder of 2026 was likely to be defined by targeted pricing, sharper segmentation, and continued competition for preferred risks.
Competitive motor premiums remain 17.1% lower than two years ago, though that gap has narrowed as a result of the first-half increases. Against pre-Covid levels, current pricing is 11.4% higher.
