Competitive motor insurance premiums have ended a quarter higher than a year earlier for the first time since 2023, marking a turn in the annual trend after two years of falling prices.
Competitive quoted premiums were 2.7% higher at the end of September than a year before, according to the latest Defaqto Market Pricing Motor Insurance Price Index.
The quarterly picture is calmer. Prices rose 0.5% in the third quarter, down from 2.1% in the second. The average of the top five quoted premiums rose 0.4% in July and 0.2% in August, then slipped 0.1% in September. It was the third consecutive quarter of growth, taking the six-month rise to 2.6%.
“The annual comparison has turned positive, but the latest quarterly figures suggest a market finding a more stable footing,” said Stephen Kennedy, director at Defaqto.
The longer view shows how far prices fell. Competitive quoted premiums are still 12.8% below their level two years ago, though they are 11.9% above where they stood at the start of 2020.
Kennedy said insurers continued to face inflationary pressure, but that their underwriting performance and appetite for growth differed. He said that was reflected in the spread of price movements between providers.
That spread was wide. Individual providers’ third-quarter movements ranged from a 3.5% cut to a 9.6% increase.
The headline figure hides sharp differences between customer groups. Older drivers saw the largest increases over the past year, while competitive prices for drivers under 26 and those aged 26 to 30 remained below last year’s levels. Drivers covering fewer miles also saw larger increases.
The regional gap was the most striking. Prices fell 1% in London but rose 16.3% in Northern Ireland, the largest increase of any region.
That fits a pattern that has emerged elsewhere. Separate price comparison data this month showed Northern Ireland was the only UK region where average premiums did not fall in the third quarter, with costs for young drivers there overtaking London. In July, Insurance Business had reported that young driver premiums in Northern Ireland had fallen to a near three-year low, which underlines how quickly the region has turned.
Francis Luery, product manager at Defaqto, said motorists would experience the return to annual price growth very differently, and that insurers and brokers needed to understand movements within the customer groups they serve.
The turn in pricing follows sustained claims inflation. The Association of British Insurers (ABI) said motor insurers paid out a record £3.2 billion in claims in the second quarter, with the average claim up 4% to £4,900, while average premiums paid rose by just £6.
As Insurance Business has reported, motor prices have looked steady on the surface but are diverging underneath. Defaqto’s data adds weight to that view: the market-wide number is modest, but movement varies widely by provider, age band and region.
Moody’s this week also said motor pricing pressure had eased as some insurers exited or consolidated, while motor claims inflation had fallen to mid single digits. It said that should support healthy underwriting, provided pricing stays firm.
For brokers, the end of annual price falls changes the renewal conversation. Clients who have seen reductions for two years may now face increases, particularly older drivers, lower-mileage motorists and customers in Northern Ireland.
The spread between providers matters more than the headline. With individual insurers’ movements ranging from cuts to increases of almost 10% in a single quarter, a broker who shops the market can still find meaningful savings for clients in the groups seeing the largest rises.
The flattening quarterly trend also suggests the market is not heading back into a hard cycle. Brokers should expect continued divergence rather than a uniform rise, with pricing increasingly driven by each insurer’s own results and appetite.
