UK car insurance premiums record first quarterly rise in over two years

UK car insurance premiums have risen for the first time since late 2023. 

The average comprehensive policy now costs £719, up £8 – or 1% – in the three months to May 2026, according to the Confused.com Car Insurance Price Index in association with WTW. 

The quarterly increase ends a run of nine consecutive falling quarters. Premiums peaked at £995 in December 2023 before entering a prolonged period of decline. Tim Rourke, EMEA P&C leader for insurance consulting and technology at WTW, said the market may be approaching a turning point. 

"After a prolonged period of price reductions, this latest uptick suggests the market may be approaching an inflection point," Rourke said. "Insurers continue to face repair cost inflation driven by vehicle complexity and supply chain disruption, as well as continued pressure from credit hire costs. If these cost trends persist, market profitability will come under even greater strain without premium increases over the remainder of 2026." 

Despite the quarterly rise, premiums remain 5% (£38) lower year-on-year – down from £757 to £719. But the trajectory is shifting. Prices rose in three of the first five months of 2026. 

Why the soft cycle is ending: the claims picture 

The underlying driver is a sustained rise in claims costs that has outpaced premium revenue for years. 

In Q3 2025, repair costs accounted for 64% of total motor claims spend, totalling £1.9 billion of the £3 billion paid out in claims, per ABI data. By Q1 2026, repair costs had risen a further 3% quarter-on-quarter, with the average accidental damage claim reaching £3,699 – up 8% in a single quarter, according to the ABI. 

Vehicle complexity is the structural driver. Modern cars equipped with sensors, cameras, and driver assistance systems cost much more to repair than older models. EY forecast in December 2025 that the UK motor market would record a net combined ratio of 111% in 2026. This means insurers would pay out £1.11 for every £1 of premium written. 

Credit hire adds further pressure. The FCA's July 2025 motor insurance claims analysis found that average credit hire costs have risen sharply. Non-General Terms of Agreement claims are up 62% between 2019 and 2023.  

The ABI and the Credit Hire Organisation are renegotiating the General Terms of Agreement (GTA), the industry framework governing replacement vehicle rates. The revision follows recommendations in the Motor Insurance Taskforce's December 2025 final report. 

Northern Ireland crosses the £1,000 mark 

Regional pricing data reveals sharp variation across the UK. 

Inner London was the only region to record a fall: down 0.4% from £1,093 to £1,088. Every other region recorded increases over the three months to May 2026. 

Northern Ireland saw the steepest quarterly rise of 8% (£73), taking average premiums from £947 to £1,020. This marks the first time average premiums in the region have crossed the £1,000 threshold since December 2023. The smallest quarterly increase was recorded in the West Midlands, at 0.1%, bringing the average to £860. 

At postcode level, West Central London recorded the largest fall of 6% (£77), with premiums dropping from £1,349 to £1,272. The area remains the most expensive postcode in the country. Llandrindod Wells continues to be the cheapest location nationally, with average premiums at £471. 

What this means for personal lines brokers 

For brokers advising motor clients, three dynamics are worth tracking. 

The Confused.com and WTW data confirms the comparison market is tightening. Steve Dukes, CEO at Confused.com, said the window for lower pricing is narrowing. "Prices have been increasing now for a few months, and drivers could soon start to see this when they shop around or renew," he said. "The insurers who have invested seriously in data will be the ones who come out ahead." 

The second dynamic is premium finance, which is used for around 48% of motor and home policies — around 23 million policies. As premiums rise, the proportion of clients paying monthly is likely to increase.  

The FCA published its final report on the premium finance market study in February 2026, concluding that the cost of paying monthly has fallen significantly since the Consumer Duty was introduced and ruling out sector-wide interventions such as APR caps. Brokers should ensure their premium finance arrangements have been assessed against current fair value requirements. 

The third is renewal timing. The EY projection of a 111% combined ratio for 2026 signals that rate strengthening is a market necessity, not a pricing anomaly. Clients renewing in H2 2026 are likely to face a different market from the one they encountered twelve months ago. 

Brokers monitoring UK car insurance premiums will want to revisit client renewal schedules and set expectations now, before competitive pressure intensifies further into the year.